As 2023 comes to a close, many faithful supporters of Second Harvest are asking how they can make an impact — today and tomorrow. The opportunities described below are ways you can support our neighbors facing hunger using tax-efficient methods.
HIGHLY APPRECIATED SECURITIES (STOCKS AND MUTUAL FUNDS)
Did you know that by giving highly appreciated securities to Second Harvest, you can fulfill your philanthropic goals without creating a taxable event? By transferring highly appreciated securities, you can give more to Second Harvest by avoiding capital gains taxes on the earnings.
IRA: INDIVIDUAL RETIREMENT ACCOUNT
If you have a traditional IRA (not a Roth IRA) and you turned 72 before Dec. 31, 2022, you are required by law to take annual distributions, called a required minimum distribution (RMD), from this account.
If you have a traditional IRA (not a Roth IRA) and you turn 72 after Dec. 31, 2022, you are required by law to take annual distributions from this account when you are 73.
Q: What is taking an RMD?
A: In its most simple form, this refers to when you are required to sell securities in an IRA and withdraw the cash generated from the sale.
Q: How much am I required to withdraw?
This is established based on an IRS equation that considers your account value and age.
For the most up-to-date information, please visit: https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras. The information in the document is correct as of Nov. 10, 2023.
QCD: QUALIFIED CHARITABLE DISTRIBUTIONS
Normally, distributions from a traditional individual retirement account (IRA, not a Roth IRA) are taxable as income when received. With a qualified charitable distribution (QCD), however, these distributions become tax-free if they’re paid directly from the IRA to an eligible charitable organization.
An IRA owner who is required to take an RMD can exclude from their gross income up to $100,000 of these QCDs. For a married couple, each spouse who is required to take an RMD can exclude up to $100,000 for a total of up to $200,000 per year.
Many donors take their RMD by directing their financial institution to send funds directly to a qualified charity. You can too!
Learn more here: https://www.irs.gov/newsroom/reminder-to-ira-owners-age-70-and-a-half-or-over-qualified-charitable-distributions-are-great-options-for-making-tax-free-gifts-to-charity. The IRS last updated the information Nov. 17, 2022.
DAF: DONOR-ADVISED FUND
A donor-advised fund (DAF) refers to an account you have with a financial institution to which you transfer (irrevocably) cash, appreciated assets or investments without paying capital gains taxes. You can then direct your financial institution to send funds to Second Harvest whenever you wish. This is one way to maximize your gift to Second Harvest, while also benefiting you. A DAF drives your flexibility in how much and how often money is granted to Second Harvest.
Please speak with your financial advisor or financial institution to learn more.
CONTACT US
Questions? Please contact Katie Toth at (509) 252-6292 or katie.toth@2-harvest.org. It is an honor to partner with you to end hunger in our community.
To learn more about donating investment assets to Second Harvest, please visit: https://2-harvest.org/investment-assets/.
