Plan Your Will
Free Wills Guide
Contact Us


Through your legacy and estate gifts, you assist students and support Olivet's mission.
Plus, you receive personal financial benefits!

Text Resize
Subsribe to RSS Feed

Monday September 25, 2023

Case of the Week

Gifts from IRAs, Part 6


Quentin Charles Douglas was the firstborn child in a large family. Throughout his childhood, Quentin's parents worked hard to put food on the table for their children. They also instilled in Quentin the value of hard work and saving money. Quentin took those lessons to heart, putting forth his best effort in school, finding a rewarding job and saving as much as possible. For many years, Quentin worked for a company that offered a 401(k) plan. During those years, he put as much into his 401(k) as he could afford to maximize the benefit of his employer's matching contributions. Eventually, Quentin moved on to other employment and made a tax-free rollover of his 401(k) into an IRA. As he approached retirement, Quentin continued to contribute to his retirement savings by maxing out his IRA contributions each year.

With his lifelong penchant for saving money and some savvy investing, Quentin was able to retire comfortably at age 65. Now in his early 70s, Quentin realizes that he will soon be taking required minimum distributions (RMD) from his IRA. Given his lifetime savings, investment income and social security distributions, Quentin does not feel he needs the additional income that the IRA distributions will provide – especially with the increased taxes tied to that income.


Quentin has previously discussed with his advisor the possibility of donating to a donor advised fund (DAF). He likes the idea of making a charitable gift now and having the flexibility to advise multiple gifts in the future to charities of his choice from the DAF. Quentin wonders if a DAF would be a good fit to receive his IRA charitable rollover gift. Before contacting his IRA custodian, Quentin decides to give his advisor a call to see if this is the best strategy for him.


Quentin's advisor is relieved to hear that Quentin called him before directing a qualified charitable distribution (QCD) to a DAF. Section 408(d)(8)(B)(i) expressly excludes Sec. 4966(d)(2) donor advised funds from being qualified recipients of an IRA charitable rollover gift. If Quentin's IRA were to distribute cash to a DAF, Quentin would be taxed on the distribution, and his DAF contribution would be treated as a cash contribution. If Quentin were to structure the IRA distribution this way, he would receive an income tax deduction for the gift to the DAF. While the deduction may offset the taxation, this arrangement could cause a number of tax issues for Quentin. First, it may bump him up to a higher income tax bracket. Second, if Quentin is a non-itemizer, he may not benefit from the income tax deduction. Third, if Quentin does itemize, he is subject to deduction limits. For charitable gifts of cash, a taxpayer may deduct up to 60% of adjusted gross income (AGI) in a given year. A taxpayer who has reached the deduction limit may carry any unused deduction amount forward for up to five additional years. Quentin decides not to fund a DAF with his IRA RMD. Instead, he makes an IRA charitable rollover gift to his favorite charity.

Published May 19, 2023
Subsribe to RSS Feed

Previous Articles

Gifts from IRAs, Part 5

Gifts from IRAs, Part 4

Gifts from IRAs, Part 3

Gifts from IRAs, Part 2

Gifts from IRAs, Part 1


Our Mission

Check out our video to learn more

Donor Stories

Learn how others have made an impact through their acts of giving to our organization and others. Explore the many benefits of charitable gift planning.

Learn More

About Bequests

You may be looking for a way to make a significant gift to help further our mission. A Bequest is a gift made through your Will or Trust. It is one of the most popular and flexible ways that you can support our cause.

Learn More

Gift Options

Find out What to Give and learn about the best assets to make a planned gift. Learn about gifts of cash, securities and property. Learn How to Give and discover gift options that provide tax and income benefits. Discover the best planned gift to meet your goals.

Learn More