by Robert Heuermann, Executive Director
Did you know that you are once again required to take an IRA Required Minimum Distribution (RMD) for 2021? The distribution is taxable unless you use it to make a Qualified Charitable Distribution (QCD) to the charity or charities of your choice. There is even a way to make the charitable contribution much larger for your future donations through charitable life insurance.
For several reasons, life insurance is an excellent tool for making charitable gifts. Life insurance provides an “amplified” gift that enables you to purchase a significant charitable legacy on an installment plan. Through a relatively small annual cost or a single one-time donation (the premium), a benefit far more than what would otherwise be possible can be provided for charity. This sizeable gift can be made without reducing the amounts you plan to leave to your children, grandchildren and others. Assets earmarked for family members can be kept intact.
Leveraging the IRA QCD rule is one way to make substantial charitable donations while you are alive, but another important element to estate planning is ensuring that these charities can continue to benefit from your estate after you have passed. One path to building up a large charitable gift is to make a QCD to the Catholic United Financial Foundation, which can invest your QCD in a properly structured life insurance policy and name your choice of charities as beneficiary. Even late in life, you can purchase life insurance that will provide a greater philanthropic benefit than simply passing on the value of your IRA.
The good news is, depending on what you want to accomplish, you can take advantage of IRA Qualified Charitable Distributions for annual donations as well as fund a life insurance policy using separate distributions from your IRA.
With these approaches, the remaining balance in your IRA remains intact and continues to grow. In addition, upon your death your charity and family beneficiaries will not only receive the life insurance benefit, but the remaining value of your IRA as well. This is a win-win financial tactic for estate planning. The QCD rule is an IRA strategy that enables you to take advantage of tax benefits while maximizing your estate; and is an excellent means to share your wealth with charities while also protecting your and your loved ones’ financial futures.
Contact your Catholic United Financial Sales Representative to learn more about using your Qualified Charitable Distributions from IRAs or for help with creating your estate plans. Or contact me directly at email@example.com or at (651) 765-4135. We would be happy to show you how to pay less on your taxes and give more than you thought possible to the Church or charities of your choice. Learn more about Catholic United IRAs (individual retirement annuities) here.
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St. Paul, MN 55126
Neither Catholic United Financial nor the Catholic United Financial Foundation is permitted to provide tax or legal advice. The information provided here is based on our understanding of the laws and regulations currently in effect. You should consult your tax preparer or tax attorney to see if you qualify for these programs and if they are appropriate for your specific tax situation.