Charitable IRA Rollover: Designated Funds or Donor Advised Funds?

May 8, 2018

Charitable IRA Rollovers

The Community Foundation of Greater Des Moines has a new way to leave a legacy and a Lifeprint.  

Designated Funds could be a great solution for philanthropic individuals wanting to do a Charitable IRA Rollover, but are not wanting to give away all of the funds to charity in that same year. Charitable IRA Rollovers to Designated Funds are allowed while Charitable IRA Rollovers are not allowed to regular Donor Advised Funds.

Here are the main summary points of the Designated Fund:

•      Donors can name one to four charities to be recipients of grants from the Designated Fund.

•      Similar to the Donor Advised Fund, grants can be made to any of the named recipients at any time over any time period.

•      The funds can be either non-Endowed or Endowed.

•      An Endowed fund receives the Endow Iowa state tax credits and has two restrictions: 1) a maximum 5% annual distribution and 2) the funds must go to Iowa charities.

•      A Charitable IRA Rollover to an Endowed Designated Fund has the maximum tax benefits possible because it avoids the taxation of an IRA distribution and still qualifies for the Endow Iowa state tax credits!

•      The Designated Funds are part of the Community Foundation’s charitable investment partners program so the funds could be managed by an outside investment advisor.

The only significant difference between the Designated Fund and the Donor Advised Fund is that a Designated Fund names one to four charities that the funds are designated for. Once the charities are designated, they cannot be changed. However, there is flexibility in that a donor could create multiple Designated Funds if need be.

Due to the new tax law, the Community Foundation has seen a large increase in the number of Designated Funds created.  For more information, please contact your Syverson Strege & Company financial planning professional today!  515.225.6000