By giving appreciated securities instead of cash, the donor receives the same tax deduction as giving cash.  The other advantage is if the donor sold the appreciated security and gave the cash to the charity, the donor would be required to pay capital gains tax on the difference between the cost basis and the sale price of the security.

This type of contribution generally is facilitated by your finance advisor or broker and may require a period of time especially when requested near year end.

Please contact the SFUMC Finance Office for the contact information you will need to transfer stocks, mutual funds, or other marketable securities.

GIFTING TO THE CHURCH USING AN IRA

The tax code allows gifting from your IRA that may provide certain tax advantages by making a direct donation to the Church through what is known as a QCD.  The basics are outlined below.  See your tax advisor or financial planner regarding your specific circumstances.

What is a QCD?  QCDs is short for “Qualified Charitable Distributions” or donations made directly from an IRA account to a qualified charity.

Accounts that Qualify – Generally most retirement accounts that make taxable distributions are eligible.

• Traditional IRA
• Simplified Employee Pension (SEP-IRA)
• Simple IRA
• Employer sponsored 401(k), 403 (b), or 457 (with an extra step)

Roth IRAs do not qualify for this special tax treatment although we are happy to discuss alternative options with you.  Employer sponsored 401(k), 403(b), or 457 accounts must be rolled over into an IRA before they can be donated to the church using a QCD hence the “extra step”.

RMD’s vs QCDs and How Are They Related?  RMD’s are Required Minimum Distributions that you must take from a retirement account annually starting by April 1 of the year you turn 73.  The amount you must take as an RMD is based on a combination of your life expectancy using an IRS table and the total of your tax deferred retirement accounts on December 31 of the prior year.

QCDs are “Qualified Charitable Distributions” or donations made from an IRA account to a qualified charity.  QCD’s may be taken any time after you reach 70 ½, so they may be taken prior to taking RMD’s.  But once you begin taking RMDs, you can also direct all or a portion of your RMD to be made in the form of a QCD by directing it to church.

Amounts That Can Be Donated:  You may make a QCD of up to $100,000 (Single or if only one spouse has an IRA) or $200,000 (Married Filing Joint - if both spouses have IRAs) annually by making a donation directly to a qualified charity.  The trustee for your retirement account must make this distribution directly to the church from your IRA.  If a distribution is made to you or through you, the benefit will be lost.

Benefits of Using a QCD:

-Taxability: The benefit of using making a QCD that that you will not be taxed on the amount of the funds going to the church.  The tax code allows for this IRA distribution directly to the charity without treating it as income on your tax return.

-Tax Bracket:  Making a QCD may allow you to keep your income at a lower level versus showing the income as part of your AGI (Adjusted Gross Income) and deducting it on your Schedule A as an Itemized Deduction.  Lower income levels may also help avoid other taxes from being triggered which are based on income levels (such as social security payments).

Also you will not need to itemize your taxes on Schedule A to take advantage of this but you may still be eligible to use the standard deduction which may also lower your taxes.

-Lower amounts of Taxable RMDs:  At the age of 73 when you are required to make RMDs, any amount you donate to the church using the QCD counts towards your required RMD.

Your Tax Situation:   As always, we suggest you talk with your accountant or financial planner to discuss your specific situation.  Please allow time for processing these transactions, especially if it is close to year end.

For Additional Information Contact:

Finance Office

770-436-4108

finance@smyrnafumc.org

Please provide the following information to the church’s Finance Office to ensure that the gift is correctly acknowledged.

Giving Amount:____________________________________________________

Date of Check request:______________________________________________

Name of Plan Administrator:_________________________________________

Designated giving (% or amount)

Operating Budget_____________________________________________

Other_______________________________________________________

Sometimes people are hesitant to do major giving during their lifetimes. They don’t know how long they will live or if they will out-live their savings or retirement funds. There are opportunities to give in addition to one’s on-going gifts through testimonial or other gifts at the time of passing. After all, you cant take it with you! This giving can take a number of forms including giving gifts through a will (called testimonial giving) such assets include cash, securities, property or portion of ones estate and also gifts of retirement accounts or life insurance policies. A number of opportunities are outlined below:

Testamentary Gifts – Gifts may be left to the Church via a will or Revocable Trust (living will).  One may make gifts to the Church in a number of ways. You can gift specific items, such as a property, homes, stock or specific amounts of cash. You can also leave a specific percentage of your estate (ie. you have three children and leave your entire estate 25% each to your children and the Church). There are an unlimited number of variations of these two concepts (ie. I leave $100,000 to the Church and everything thing is split between my children. If you are married, you can use what is termed as a “second to die” gifting. You can have your husband or wife be the beneficiary of everything you own but if you are the “second to die” you can stipulate that everything goes as you instruct to the Church and/or your children.

Please consult your financial planner and/or estate attorney who handles your wills or Revocable Trust to work through your wishes and property document them for you.

IRA/Roth IRA/401k/403(b) – IRAs and other retirement accounts are not subject to or part of a will.  IRAs and other retirement accounts are transferred to their named beneficiary. The Church can be that named beneficiary. Contact the administrator or custodian of your IRA/Roth IRA/401k/403(b) and have them send you the forms. The accounts can be left to the Church in their entirety or a combination of the Church and others such as the Church and your children. Also note that if an individual inherits an IRA, it may be tax deferred for a period of time but will ultimately be taxed to an individual beneficiary. As always consult your tax advisor.

Insurance – Much like retirement accounts, insurance policies do not pass by a will. They are transferred to their named beneficiaries. Both whole and term polices have named beneficiaries. The accounts can be left to the Church in their entirety or a combination of the Church others such as the Church and your children. Contact the administrator of your insurance policy and have them send you the forms.

Please be specific by using Smyrna First United Methodist Church with our address of 1315 Concord Rd SE Smyrna, GA 30080 as the beneficiary.

A Donor Advised Fund (DAF) is like a charitable investment account. It allows people to make a contribution of many different types of investment assets to the DAF and take a charitable deduction for the contribution in the year it is made.  The funds are invested so that they may continue to grow tax-free and the donor can decide when, and to which charitable organizations they would like to the funds to benefit.

Process:

1. Open an Account: Choose a Donor Advised Fund from any of the qualified companies that manage them and establish an account. Many brokerage houses and Community Foundations offer DAF’s.  Donors can often choose a name/title for the fund which would allow the donor to show the funds coming from the “Willimas Family Fund”, the “Smyrna First UMC Benefit Fund” or the donor could make the fund “Anonymous” etc. There are fees for setting up and managing the fund so make sure you understand the costs associated with the DAF and any requirements such as minimum amounts required to open an account or how often gifts must be made.

2. Make a Tax Deductible Donation: You can make a non-revocable gift of cash, stock, mutual funds, IRAs, 401k’s, business interests, private equity interests and other non-publicly traded assets. The gift is deductible in the year the gift is made to the DAF, not the year the funds are given to charity.  Future gains on the investments are not taxed to the donor. You may be able to avoid some or all taxes on the donation compared to a simple sale of the asset followed by a donation of cash to the church (consult your tax advisor). For the amount to be deductible on one’s taxes, the donor must itemize using Schedule A and not take the standard deduction.

3. Grow: Most sponsor companies have many different options for investing the funds you donate.  The fund can liquidate or sell a stock position after the donation to diversify the investment. You can select the options you are comfortable with. The investments will grow tax free within the funds selected until the gifts are ultimately made.

4. Support: You can determine both the timing and amount of gifts made from your DAF.  You can pick your time horizon and how many charities or religious institutions are supported as long as they are IRS qualified public charities.  For example, you could have the fund donate to the church over 5 years or have 75% go to the church and 25% to another qualified organization like UMCOR. The DAF can research opportunities for donations in addition to those made to the church if you need assistance deciding or want to have a specific purpose or mission for some of the funds.

Pros:

1. DAF’s allow people to time their charitable gift giving. This may allow someone to optimize a charitable donation in a high tax year while the funds may be given to the beneficiary organization in a different year or over a number of years.
2. You can avoid some or all taxes on the donation compared to a simple sale of the asset, followed by a donation of cash to the church. Consult your tax advisor.
3. A DAF may allow someone with concentrated stock or investment to contribute it to the DAF without triggering a large tax gain and allow the DAF to liquidate and diversify the holdings to reduce risk for the beneficiary organization while the funds remain invested.
4. The donations allows for tax free growth of the investment outside of the donors taxable estate.
5. DAFs are flexible and can make the management and investment responsibilities so that you don’t have to.
6. You can make anonymous gifts using a DAF.
7. DAFs provide a way to donate illiquid investments of value to organizations who may not have the resources to manage them.
8. Family Involvement - If you wish, additional members of the family can also make gifts from the fund.

Con:

1. DAFs do have costs of establishment and management. Fees generally range from 0.5% to 1% per year.
2. Understand the terms of the fund you choose. There may be minimum gift requirements or account establishment minimums.
3. Because there are often no annual requirements to donate, and some growth based due to the investments, some would argue that there is no incentive to get the funds into the hands of the charity you are trying to help. The goal is to help the organization of your choosing.  Be cognizant of how the timing of the gift may affect the charity.  They may be able to compound the gifts in non-financial ways.