Thank you for your generosity this year. To end the year strong, please bring your year-end gifts to the church by noon on December 31 or make sure they are postmarked by December 31.
Tax-Smart Charitable Giving
As the Finance Committee continues to review and track current revenues and expenditures for 2024, we recognize, as you likely do, the difference between them. We, however, do remain optimistic that by years end we will have received more revenues than expenditures. This can only be accomplished by us, THE CHURCH. Through our giving, we support so many missions and ministry actions. The Finance Committee has presented and the church has approved 2025 Ministry Action Plan (MAP) or as we often say, the budget. Please be prayerful for the Finance Committee, as we do our part of the work of the church. Also be prayerful for our ministries’ and missions’ needs.
There are several opportunities of supporting the church in the present and in the long-term. The Finance Committee wants to share a couple of those opportunities in this Thursday Thoughts. While the article may be a bit lengthy, we urge everyone to read, even re-read, the entire article. It hopefully offers thinking for our current days and future years.
Two Tax-Smart Tips for Charitable Giving with an IRA is a way for giving to the church – a way that many may not have heard of or thought of.
Making Qualified Charitable Distributions (QCDs) and Naming Charitable Beneficiaries.
Giving to charity (church) during retirement years through a QCD, is a smart way to save on income taxes.
Retirement-age individuals and couples may find that they don’t need income from their traditional IRAs in certain years or all years. Their other sources of income may be sufficient. Some may not want the IRA income because these withdrawals are subject to ordinary income tax, and more taxable income may push these IRA owners into a higher tax bracket. In particular, a higher tax bracket can have adverse impacts on Social Security payments and Medicare benefits.
Regardless, starting at age 72 the IRS mandates traditional IRA owners take annual income withdrawals, known as Required Minimum Distributions (RMDs). Failure to take these withdrawals could subject IRA owners to stiff penalties. Thankfully, charitably-minded individuals and couples age 70½ and older have a tax-smart strategy available with traditional IRAs: the QCD, also known as a charitable IRA rollover. The QCD allows a donor to instruct a traditional IRA administrator to send up to $105,000 in 2024 and $108,000 in 2025 – all or part of the annual RMD –to an operating charity or church. Couples who submit tax returns with married filing jointly status each qualify for an annual QCD of up to $105,000 for 2024 and $108,000 for 2025. Keeping in mind that up to $105,000 per year may be rolled over to a qualified charity, donors may make a QCD in excess of their RMD.
The IRA assets go directly to the charity or church, so donors don’t report the QCD as taxable income and don’t owe any taxes on the QCD. In addition, the assets can be put to good use by a donor’s favorite charity, making QCDs a win-win strategy.
The second tip is to set up giving beyond one’s lifetime by naming a donor-advised fund account or church or other public charity as a Charitable Beneficiary. Although donors cannot make QCDs to their donor-advised fund accounts during their lifetime, they can transfer traditional IRA, 401 (k), and some other tax-deferred assets to a donor-advised fund account upon death by way of a beneficiary designation.
Not all assets owned (e.g., real estate, brokerage accounts, and retirement accounts) are treated the same when passed to heirs. In fact, a unique feature of traditional IRAs is that heirs pay income taxes on the inherited assets at their own income tax rate at the time of withdrawal.
This unique tax feature is why churches, or public charities, can be ideal beneficiaries of traditional IRA assets. Churches and public charities—including donor-advised funds—do not pay income tax on IRA income, which means every penny of the donation can be directed to support the donor’s charitable goals. Naming a Charitable Beneficiary is easy to do and may result in substantial tax savings for a donor’s heirs and estate.
SO, what can you do next? Contact your CPA/tax preparer, then your Financial Advisor to discuss these giving and tax saving options with them. Pray and consider making a QCD to the church or naming the church as a Charitable Beneficiary.
A CHURCH at WORK and GROWING TOGETHER can only carry out the ministries and missions that were prayerfully and intentionally planned when the resources are available. PLEASE consider your abilities and willingness to BE A GREATER JOYFUL GIVER.
Blessings & Prayers
Finance Committee
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