Latest News

For donors with significant IRA balances, the question isn’t simply whether to give - it’s what asset to give. The answer, from a pure tax-efficiency standpoint, is almost always the IRA.

The IRD problem for individual beneficiaries

When a client’s IRA passes to a child, those funds carry Income in Respect of a Decedent (IRD). 

The inheriting individual must recognize the full distribution as ordinary income, potentially at the highest marginal federal rate. Under SECURE 2.0, most non-spousal beneficiaries face a mandatory 10-year distribution window, compressing that income recognition and amplifying the tax burden significantly.

Why IRAs are well suited for deferred charitable gifts

A qualified charity receives the IRA assets entirely income-tax free. No IRD. No 10-year compression. 

Every dollar designated to charity from an IRA escapes federal income taxation entirely - making the IRA the single most tax-efficient asset a donor can leave to a charitable organization.

Lifetime giving from an IRA and legislative update

Donors age 70½ or older may make Qualified Charitable Distributions (QCDs) directly from an IRA to a qualifying public charity - up to $111,000 annually in 2026 - excluded from gross income.

Under current law, QCDs cannot be directed to Donor Advised Funds. 

However, bipartisan legislation introduced by Senators Todd Young and Michael Bennet in early March 2026 would expand charitable giving tools by allowing certain QCDs to be directed to Donor Advised Funds, increasing flexibility for donors who use these vehicles for long-term charitable planning. 

Simplifying IRA charitable beneficiary planning

As we discussed earlier, donors may establish a deferred fund with the Foundation to document their testamentary charitable plans.

For many families, retirement accounts have grown into one of the largest assets in the estate. Directing those assets to multiple charities through an IRA beneficiary designation can be difficult to structure - and even more annoying to update as charitable priorities evolve.

Instead, a donor may name the Community Foundation as the sole charitable beneficiary of the IRA. 

Through the Foundation’s deferred fund agreement, the donor can outline the specific nonprofits or causes they wish to support or name their children as advisors to the fund.

This approach simplifies planning for everyone involved. Rather than managing multiple beneficiary designations through their IRA custodian, donors can update their charitable plans directly with the Foundation as their wishes evolve. 

It also allows large retirement assets to support multiple organizations over time, rather than requiring a single lump-sum distribution.

This article is for informational purposes only and does not constitute legal or tax advice. Donors should consult their attorney or tax advisor regarding their specific circumstances.