Described below is a way for members of the Clan Egan Association (“Clan Egan”) to obtain personal tax benefits while helping Clan Egan. We urge you to consider this opportunity if you are eligible.
Because Clan Egan is a nonprofit corporation which the Internal Revenue Service (”IRS”) has determined is a charitable organization qualified under Section 501(c)(3) of the Internal Revenue Code (“IRC”), individuals with an Individual Retirement Account (“IRA”) who are over 70-1/2 can achieve particular tax benefits this year from making a charitable contribution directly from their IRAs to Clan Egan. Such a contribution is called a “Qualified Charitable Distribution” (“QCD”), and will satisfy the IRC requirement that IRAs make “minimum required distributions” (“MRD”) to their beneficiaries.
Failure to take your MRD in any year subjects you to significant penalties. The amount of your MRD is determined based on an IRS formula that takes into account your life expectancy and the IRA size, and is usually calculated by your IRA custodian. For the purposes hereof, the crucial point is that QCDs can satisfy MRD requirements and are never taxed to you. A QCD never passes through your taxable hands, is not treated as a charitable contribution for tax return purposes, and is not subject to the haircuts and limitations on charitable contributions.
The requirements for a QCD can be summarized as follows:
- You MUST be age 70-1/2 or older on the date of the distribution.
- A QCD will count toward satisfying your minimum required distributions (MRDs).
- QCDs are federally tax free and are limited to the amount that would otherwise be taxed as ordinary income.
- The maximum annual exclusion per individual is $100,000.
- The distribution must be made payable directly to the qualified charity by the custodian.
- The charity must qualify as a 501(c)(3) organization and be eligible to receive tax-deductible contributions (Clan Egan meets all of these IRS requirements).
- You need to start your QCD soon in order to have it completed by December 31, 2016 as it can take time for a custodian to process a QCD
You can obtain additional information regarding QCDs and MRDs by Googling “qualified charitable distribution” and “minimum required distributions” or by contacting Byron Egan at firstname.lastname@example.org_1_clan-egan-info-re-qualified-charitable-distribution-ira