November eRate: IRA Mumbo Jumbo - The QCD Is Not the RMD

A Little Bit of IRA Mumbo Jumbo:
The QCD Is Not the RMD

The Qualified Charitable Distribution (“QCD”) from traditional IRAs is not new; it has been around since 2007. The Tax Act of 2006 ushered in this unique provision that allows distributions from traditional IRAs made directly to charities to escape the normal income tax on money taken out of a retirement plan. The donor is allowed to exclude the amount of the QCD from taxable income, but the offset is that there is no charitable income tax deduction for the gift being made to charity.

There has been confusion about the QCD ever since 2007, because it deals with aspects of IRAs that many are unfamiliar with. The biggest area of confusion has been distinguishing the RMD for a traditional IRA from a QCD. They are not the same thing. Not at all. And it is dangerous to confuse the two.

PG Calc WEBINAR November 21

Show Me the Money: Financial Terms for Fundraisers

What’s a QCD? What’s an RMD? And how do they relate to a CGA? What is cost basis all about? And what about S-CRUTs and F-CRUTs, and all the other “flavors” of charitable remainder unitrusts? So many questions, so much confusion! In planned giving, we use a lot of acronyms, abbreviations, and other terms, with the assumption that everyone knows what we’re talking about. This webinar will go through an extensive list of the everyday terms bandied about in planned giving conversations – definitions of the terms and how they are relevant. The session should be helpful to anyone involved in planned giving conversations.

Presented by
Jeffrey Frye

Thursday,
November 21, 2024
1:00 - 2:00 pm ET

UPCOMING TRAININGS

When the IRS Needs Your 1099s: GiftWrap Steps to Filing Success - FREE!

January 9, online (1.5 hours)

PGM Anywhere and Gift Annuities

January 21-22, online (4 hours over 2 days)

PGM Anywhere and Charitable Remainder Trusts

February 5-6, online (4 hours over 2 days)

Lead Trust School

March 5-6, online (6 hours over 2 days)

Quick Tip: QCD CGA Is Now “EZ” in PGM Anywhere

On October 25th, PG Calc released a new version of PGM Anywhere that streamlines the modeling of life income gifts funded with a qualified charitable distribution (QCD). In the past, clients had to select “Ordinary income property” as the property type, and then enter a cost basis of zero to successfully model a charitable gift annuity (CGA) or charitable remainder trust (CRT) funded with a QCD.

With the new release of PGM Anywhere, users can instead choose “Retirement asset” in the Property type menu.

Dec2024 eRate - QT1

Making this selection will cause the Transfer type menu to appear. To model a QCD gift, choose either “One QCD from one donor” or “Two QCDs from married donors.”

Dec2024 eRate - QT2

The new release also expands the Actuarial Chart to include the value of the gift to the charity when this value differs from the charitable deduction. To locate the value to your charity of the gift when the deduction is zero (which it always is for a QCD), select the Actuarial Chart and refer to line 11.

Dec2024 eRate - QT3

We recommend sharing this chart with your finance team should they have any questions about the value to your organization of a CGA or CRT funded with a QCD.

From the Blog: IRS Announces Tax Schedules, Exemptions, and QCD Limits for 2025

Many federal tax items are indexed annually for inflation, such as the income tax brackets for individuals and trusts, the standard deduction, the gift and estate tax exemption, and qualified charitable distribution (QCD) limits. The IRS recently announced what the new amounts will be for all 63 of these items in 2025. The new values will increase about 2.8% over the 2024 values they will replace. All of these changes are minor and should have little effect on the tax incentives that encourage donors to make charitable gifts.

Read the blog post . . .

Things We Are Following: ACGA Rates Will Remain Unchanged

On October 21, the Rates and Regulations Committee at the American Council on Gift Annuities (ACGA) confirmed that that the ACGA will not be changing its suggested maximum gift annuity rates at this time.

Ordinarily, changes to the ACGA’s suggested maximum annuity rates take effect on either July 1 or January 1. The ACGA’s announcement that rates will not be changing means the rates that became effective January 1, 2024 should remain in effect at least through June 2025. It would take a dramatic change in interest rates for that outlook to change.

**Major PGM Anywhere Update Released on October 25**

After months of work, we released the latest update of PGM Anywhere on October 25. The new release adds nine new property types to select from, including tangible property, collectibles, retirement assets (QCD or not a QCD), and depreciated real estate. You can also fund a gift with a combination of any two or three property types, enabling you to illustrate, for example, a gift funded with appreciated stock plus cash or with mutual fund shares held long term and short term. All calculations and presentations have been updated to support these enhancements. Other improvements include:

Autosave and save case prompt options
Six QCD templates
IRS discount rate selection message when deduction won’t be maximized
Improved accessibility and security
Sharper rendering of charity images in headings

You can read all the enhancement details by clicking the release notes link on the PGM Anywhere login screen. We encourage you to become familiar with all the new features so you can start using them in your work. As always, you can contact Client Services at support@pgcalc.com or 888-474-2252 if you need any help with the new features.

Find Best Asset Website Widget Coming Soon

Early this year, we created decision trees for outright gifts and charitable gift annuities that help donors decide whether to fund their gift with cash, appreciated securities, or a qualified charitable distribution (QCD). In each tree, answering a series of yes/no questions leads to a recommended funding asset. We have now turned these very popular decision trees into an interactive Find Best Asset widget that can be embedded in your organization’s website. We will be including the new widget on the websites of all our planned giving website clients.

Click here, and we will notify you when the widget is available.

In the meantime, you can download the decision tree for funding an outright gift.

And, download the decision tree for funding a gift annuity.

CGA Manual to Be Updated in a Few Days

We are about to send our annual update of Charitable Gift Annuities: The Complete Resource Manual (CGA Manual) to our electronic subscribers. The print version of the update is in production and should be in the mail within the next two weeks.

Whatever your gift annuity question, the answer is in the CGA Manual. State regulations, special situations, every funding asset imaginable, best practices. The CGA Manual covers that and much more! The manual comes with 51 prototype letters and documents that you can adapt for use in your work.

For just $150 plus $75/year, you can have the electronic CGA Manual at your fingertips and be on your way to an exceptional gift annuity program.

Learn more about the CGA Manual or order your own copy on our website.

Helping Donors Understand Year-end Deadlines

While many donors think December 31 definitively ends the year, it is important to help them understand that many end-of-year gifts – particularly some planned gifts – require taking action well before the last day of the year to count for tax purposes.

We have developed this article to help better understand what needs to happen when for many common gift types, including gifts of:

Cash (check and wire)
Stock
Mutual Funds
Credit Card
IRA QCD

Year-End Giving: Deciphering Gift Dates

2025 Webinars Coming into Focus, 2025 Software Training Schedule Announced

We have our webinar schedule for 2025 largely filled out. We have finalized the topics and presenters listed below. We will be announcing our 2025 webinar schedule, including dates, soon.

PG Calc Webinar Topic	Presenters
What to Give? QCD, Cash, or Stock	Jeff Lydenberg and Bill Laskin
Donor Advised Funds	Gary Pforzheimer and Stephen Kump
Top Ten Estate Problems and What to Do About Them	Andrew Fussner – American Heart Association
Gift Annuity Regulations and Compliance - Q&A Webinar (FREE)	Edie Matulka and Julie Goldenberg Hay
Taxation Basics for Fundraisers	Craig Wruck
You’re in the Will! Now What? Strategies That Lead to Larger Legacy and Lifetime Gifts	Russell James – Texas Tech University
The Many Rules Regarding Dates of Gift and Substantiation Q&A (FREE)	Jeff Lydenberg and Kara Morin
Alternative Endings: Voluntary Terminations and (a Little on) Appraisals	Jeffrey Frye
Conducting a Legacy Challenge	Jay Pacitti and a gift planner
Planned Gift Marketing Survey Results (FREE)	Andrew Palmer
Gifts of Life Insurance	Craig Wruck

We have finalized our PGM Anywhere and GiftWrap training schedules for 2025. In addition to sessions on running our software, specialized sessions will include Lead Trust School, Planned Giving by the Numbers, and a free session in January on using GiftWrap to file 1099-Rs (1099-Rs will be due on January 31!). Most sessions will be delivered online. Learn more here.

We Enjoyed Reconnecting at the CGP National Conference in Orlando

It was great to reconnect in person with so many of you at the 2024 CGP Conference in Orlando. Thanks to those of you who stopped by our booth to say hello and learn what PG Calc is up to.

We enjoyed having so many opportunities to share our thoughts with conference attendees, from Craig Wruck’s pre-conference session, Gift Planning Fundamentals: Tools & Techniques, to Gary Pforzheimer joining the new Hall of Fame inductees for a panel discussion, to Bill Laskin and Jeff Lydenberg’s session on Cash, Securities, or QCD? What Should Your Donor Give? It is always so nice to meet in person and get to know our clients better.

When It Comes to Endowment Gifts, Knowledge Is Power for Union Adventist University

“The sub account information we receive from PG Calc allows us to immediately answer donor questions such as, ‘What is the current value of my endowment?’ If a donor is funding their endowment over the timeframe we allow, they don’t always remember how far along they are toward reaching the required minimum. Or some donors have a funding goal well beyond our minimum, and they will frequently ask for an update to see how close they are toward reaching their desired goal.

“When a donor calls us with this question, we are so fortunate to have the monthly sub account reports right at our fingertips so we can immediately provide them an answer. We also find that annually sending donors their financial report for the entire fiscal year will generate more gifts for their endowment when they see the impact being made with the endowment they created.”

-- LuAnn Davis, CFRE
Vice President for Advancement
Union Adventist University

Learn more about Union Adventist University.

Learn about PG Calc’s Endowment Sub-Accounting Service.

PG Calc 129 Mount Auburn Street Cambridge, MA United States

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A Little Bit of IRA Mumbo Jumbo: The QCD Is Not the RMD