Floyd and Judy Englehardt, of Le Sueur, Minnesota, are Michigan 4-H alumni from Saginaw and Menominee counties, respectively. They had donated previously to Michigan 4-H, but they wanted to truly make a difference while also making a tax-free donation.
To achieve both goals, the Englehardts decided to make an IRA charitable rollover gift, also referred to as a qualified charitable distribution (QCD).
The Englehardts chose to designate their gift to support general 4-H scholarships for 4-H’ers pursuing post-secondary education. However, IRA charitable gifts can be designated to a donor’s 4-H county or a 4-H program area of choice.
“We were both active in 4-H and both offered 4-H scholarships to attend Michigan State University (MSU),” Judy Englehardt recalled. “4-H is a good activity to learn new things and meet other people working towards similar goals.”
Floyd and Judy met during their college years at MSU. Judy worked at the State 4-H Office and helped set up for 4-H events on campus. It was during one of these on-campus 4-H events that Judy and Floyd met and later married and had four boys. Floyd earned a bachelor’s degree in agricultural mechanization from MSU in 1963 and became an engineer at Green Giant after serving three years in the navy. Judy earned a bachelor’s degree in elementary education from MSU in 1964 and became a teacher.
How to make a tax-free IRA charitable distribution
Qualifying donors aged 70½ or older may donate to charity each year by transferring up to $100,000 directly from an IRA.
- Instruct your IRA custodian to distribute a gift amount (up to $100,000) directly to the Michigan 4-H Foundation by Dec. 31.
- The gift amount can count toward the required minimum distribution (RMD) for the tax year. If you have check-writing features on your IRA, checks must clear your account by Dec. 31 to count toward your RMD for the calendar year.
- The entire gift amount qualifies as a charitable distribution. The gift amount is not included in your personal income for federal taxes, lowering your taxable income.
- The distribution cannot be considered an income tax charitable deduction. The gift is considered a tax-free gift because the donor doesn’t pay taxes on the distribution if it’s made directly to a charity.
- Distributions can be made only from traditional individual retirement accounts or Roth IRAs. Typically, 403(b), 401(k), pension and other retirement plans are ineligible.
This opportunity ends Dec. 31, 2022, for 2022 tax credit.
For more information, contact Carrie Horstman by email at firstname.lastname@example.org.