Maximizing Your Impact: Tax Benefits of Donating to Friends of the ACFL With Your IRA

“The power of Qualified Charitable Distributions (QCD) is often overlooked, but should be an important part of anyone’s charitable giving plan. By redirecting a portion of your RMD from IRAs to a qualified charity, you are able to reduce your AGI in retirement which can lead to lower Medicare premiums and how your Social Security benefit is taxed. Just remember that while QCDs are relatively easy to implement, there are still important steps and paperwork that must be handled correctly so we always advise our clients to not wait and submit QCDs well ahead of year-end deadlines.”

- Amy Hong CFP® Financial Advisor and Owner of Barrett Financial

Supporting the Friends of the ACFL is a powerful way to protect and preserve our local natural treasures. For supporters aged 70½ or older, making charitable contributions directly from your Individual Retirement Account (IRA) can also offer significant tax benefits. Here’s how you can maximize your impact for the ACFL while making the most of your retirement savings.

What Is a Qualified Charitable Distribution (QCD)?

A Qualified Charitable Distribution (QCD) allows individuals aged 70½ or older to transfer funds directly from their IRA to a qualified charity like Friends of the ACFL. For 2025, you can donate up to $108,000 per year tax-free through a QCD, and married couples with separate IRAs can each contribute up to this limit. The key is that the funds must be sent directly from your IRA to Friends of the ACFL-distributions made to you personally do not qualify.

"The Anacortes Community Forest Lands are a refuge that invigorates us each day in different ways. We give because It’s important to keep this treasured area so protected and accessible."

~ Zach Mosner & Patty Friedman

Friends of the ACFL members and recent IRA giftors

Key Tax Benefits

• Tax-Free Giving: Normally, withdrawals from a traditional IRA are taxed as ordinary income. With a QCD, your donation to Friends of the ACFL is excluded from your taxable income, potentially saving you a significant amount in taxes. This is especially valuable if you take the standard deduction and do not itemize.

• Satisfy Your Required Minimum Distribution (RMD): Once you reach age 73, you are required to take annual minimum distributions from your IRA, which are usually taxable. QCDs can count toward your RMD for the year, allowing you to fulfill your obligation while supporting the Friends of the ACFL and reducing your taxable income.

• Lower Your Adjusted Gross Income (AGI): Because QCDs are not included in your income, they can help keep your AGI lower. This can have additional advantages, such as reducing the taxable portion of your Social Security benefits and potentially lowering your Medicare premiums.

• No Double Dipping: While QCDs are excluded from taxable income, they do not also qualify for a charitable deduction. The main benefit is the income exclusion, not an itemized deduction.
  

Eligibility and Guidelines

• Age Requirement: You must be at least 70½ years old at the time of the distribution.

• Annual Limit: For 2025, you can donate up to $108,000 per year from your IRA. Married couples with separate IRAs can each donate up to this limit.

• Eligible Accounts: QCDs can be made from traditional IRAs, inherited IRAs, SIMPLE IRAs, and SEP IRAs (if inactive). They cannot be made from 401(k)s or other employer-sponsored plans.

• Qualified Charity: Friends of the ACFL is a qualified public charity and eligible to receive QCDs.

• Direct Transfer Required: The IRA custodian must send the funds directly to Friends of the ACFL. Checks made payable to you do not qualify.

Make a Lasting Difference to our Forest Lands

Donating directly from your IRA to Friends of the ACFL through a Qualified Charitable Distribution is a smart and impactful way to support our education and stewardship programs. You can fulfill your philanthropic goals, satisfy your RMD, and reduce your taxable income-all at once.

If you are considering this giving strategy, consult your financial or tax advisor to ensure you meet all requirements and maximize your benefits. We are also here to help answer any additional questions!