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October 2015 Newsletter

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Planned Giving Mentor

Professional Partnerships: Hospice Philanthropy Group L.L.C.


Quotes for today..... Try not to become a person of success, but try to become a person of value....Albert Einstein.

Quickie quiz:.....Florida is the top state to retire according to WalletHub. Can you name any of the next five states? Where does your state rank? Click for the full report. Answers below.

Senior Spirit.....Click the Senior Spirit link (below left) for a copy of the latest articles from Certified Senior Advisors

Past issues of the Newsletter are available in the Newsletter Archives

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IRA Rollover now and forever.....There is some $7.4 trillion in retirement assets and the first baby boomers are about to take their IRA required minimum distribution (RMD) this year. It represents a golden opportunity for the astute development/planned gift professional.

On December 18. 2015 Congress approved and Obama signed the charitable IRA rollover for 2015 and future years. It was officially called Protecting Americans from Tax Hikes Act of 2015 (HR 2029). When signed it meant fundraiser's and advisors had only 12 business days to promote and finalize IRA rollover gifts for 2015.

Thankfully the law provided, as in previous years, gifts made before December 18, 2015 were considered Qualified Charitable Distributions (QCD) if made after January 1, 2015 and properly receipted.

This ends years of last-minute renewals and provides much needed certainty for both financial planners and development staff. Donors and clients looking to take advantage of the QCD can begin planning early and with certainty.

QCD Benefits: Going forward, charities and financial advisors should promote and discuss the benefits with charitable inclined individuals. A significant benefit is the QCD can satisfy the required minimum distribution (RMD) for each year up to the limit of $100,000 per individual.

Example: A first time donor (male or female) aged 70 ½ will have to take 3.649% of the December 31st account balance from their IRA account in 2016 as their Required Minimum Distribution (RMD).

By not including the distribution in Adjusted Gross Income a donor can potentially avoid the loss of exemptions, deductions, credits and phase outs, the alternative minimum tax, the 3.8% surtax on net investment income and the increase in Social Security premiums for Medicare Part B and Part D.

Standard Deduction Donors: Donors who take the standard deduction amount on their taxes and do not itemize deductions are the largest target market for using the QCD. The standard deduction amount for a qualified single individual is $7,850 and a couple is $$15,100.

Many older IRA account holder’s do not have mortgage interest or state and local taxes deductions. They may not make large charitable gifts. The total amount of their deductions are not sufficient to itemize deductions on the taxes. Therefore, it make sense for them to use the IRA rollover option to complete their gifts. By not having to report income in essence they receive a “100% deduction” for their QCD. The cost of the gift is lower due to the additional tax savings from using the QCD provisions.

Must be 70 ½: IRA owners and beneficiaries age 70 ½ and older qualify for the QCD. A QCD can be made only if the distribution is made on or after the date the IRA owner actually reaches age 70 ½ so be careful if you have a prospect who’s 70 birth day is after July 1, 2016, they may not qualify to do an IRA rollover in 2016 but will be eligible in 2017.

Examples: Jane want to make a QCD to your charity and her birth date is January 22nd. She turns 70 ½ on July 23rd and can make her QCD after that date but not before.

Richard’s date of birth is August 11th and he will be age 70 in 2016. He is not eligible to do a QCD in 2016 but must wait until February 12, 2017 to do his first QCD when he is 70 1/2.

$100,00 Annual Limit: QCDs are capped at $100,000 per person per year. For married couples where each spouse has IRAs, and each is age qualified, each can contribute up to $100,00 from his or her own IRA. There is no gift splitting, thus one IRA owner may not contribute $200,000 and consider it 50% from each spouse.

Direct Transfer Required: Prospects must make a direct IRA transfer to charity as the funds must move directly from the IRA to charity. Many IRA custodians have online forms to complete the rollover.

Example: My Etrade account required me to complete both an IRA withdrawal form and a Charitable Gift form and mail them together to effect the QCD transfers I made in October 2015, anticipating the December rollover approval.

It is wise to have available sample QCD letters for donors to use as templates for their QCDs. The donor may not take a withdrawal and give the fund to charity and have it qualify as a QCD, but they would receive the normal gift charitable deduction.

See sample letter courtesy of Duke University for donor’s who wish to direct their custodian or plan administrator to make IRA QCDs. For multiple sample letters simply do a Goggle search.

No Benefit Back: There may be no benefit back to the donor for a QCD. Therefore, no gifts to special events for sponsorships or attendance as these are a prohibited benefits.

Also not allowed are any transfers to donor advised funds at community foundations, but gifts to field of interest funds held at community foundations are allowed.

A QCD may not be used to fund a charitable gift annuity, charitable remainder unitrust annuity trust or pooled income fund, supporting organization or family foundation.

A QCD in payment to satisfy an outstanding pledge is allowed and is not a prohibited transaction.

Charitable Substantiation: Each and every gift over $250 requires a contemporaneous substantiation. QCD must also be receipted with a qualified substantiation letter which requires special wording indicating the gift was from the IRA, the amount of transfer and that no gifts or benefits were derived from the gift. See sample receipt letter.

No Keogh, SEPs and SIMPLEs, 401(k), 403(b), etc. apply. Only rollovers from IRAs qualify for the QCD tax treatment. There are many other retirement plans donors may have. If a donor wishes to use the QCD option and their current plan permits a rollover to an IRA they must transfer all or part of the existing retirement plan to an IRA first, (it is a tax free transfer), and then initiate the QCD with the new IRA custodian account.


10 action items for your charity to promote and accept QCD from IRAs.....1. Federal income tax rules for QCDs are now permanent. Know your state rules on the treatment of IRA rollover gifts. State income tax treatment of QCD vary from state to state.

2. Check your web site for IRA rollover content especially if you have in-house developed content. Put IRA rollover content under your “Ways to Give” section.

3. If you have web content from a commercial provider check to see it is up-to-date and easily available. It should not be buried deep in the web site content so it takes many clicks to fine it. Check that it has sample of letters to the IRA custodian.

4. Develop an advertisement for your external publications, list your IRA web link and your contact information to explore further and answer questions.

5. Develop a fact sheet on IRA rollover requirements and include frequently answered questions. Make it available as a PDF on your web site.

6. Develop two (2) postcards to send out on the IRA rollover option in June and September. Remember donors may begin planning early in the year to make their gifts so get the word out early. Sample 1, Sample 2, Sample 3. Sample (remember samples need updating)

7. Develop an IRA donor story or two illustrating the benefits of IRA Qualified Charitable Distributions (QCDs). See sample donor story from Renaissance Charitable Foundation, Inc.

8. Make a board, leadership and volunteer presentations on how an IRA QCD works for age appropriate prospects.

9. Age qualify your donor list using a commercial service or leadership/volunteer intelligence. These individuals become your probable donors for IRA rollover gifts.

10. Develop flyers to be included in all thank you letters on both the benefits of charitable gift annuities and IRA rollover provisions.


Gift Annuity Rate Update and Laminated Gift Annuity Rate Charts..... At its semi-annual meeting on November 2, 2015, the Board of Directors of the American Council on Gift Annuities (ACGA) voted to reaffirm the existing maximum rate schedule for charitable gift annuities which was originally published on January 1, 2012.

As part of its ongoing review process, the Rates Committee of the ACGA monitors on a weekly basis certain interest rates that underlie the investment return assumptions used to create the rate schedules. The committee also evaluate annuitant mortality and other assumptions as appropriate.

The ACGA uses the mortality assumptions from the 2012 IAR Mortality Table recently promulgated by the National Association of Insurance Commissioners when calculating a schedule of suggested gift annuity rates.

The ACGA will meet again in April, 2016.

Rate Chart....... If you would like a laminated rate chart for the most recent rates simply request one using the following E-mail request and put Laminated Chart in the subject line.

Download a PDF chart of single life $10,000 cash gift and two-life $100,000 security gift for ages 60,65,70,75,80 here.


Reasons to ask for planned gifts.... EVERY DAY - An estimated 9,300 Americans will turn 65 years old each day next year (2016). This group represents the 6th of 19 years of “Baby Boomers” turning 65.

An estimated 11,400 Americans will turn 65 years old each day by the year 2029 (source: Government Accountability Office).

Ending proposal letters?.....How do you end proposal letters so you get a response? Try ending with the following:

"At (name of charity) we will take time to get to know you, your family, your desires, your concerns, your goals, and any potential future problems that will effect your charitable gifting strategy. Your estate plan should be a custom fit not a "one size fits all plan." Remember good planning and good giving takes time and is no accident. I await your comments on the above proposal."


Quiz answer: The top five states were Florida, Wyoming, South Dakota, South Carolina and Colorado. The five worst states were Vermont, Connecticut, Hawaii, District of Columbia and Rhode Island was last.


National Estate Planning Awareness the third week in October. Charities should begin now to plan their active promotion of planned gifts during National Estate Planning week. Estate planning is important for adults of all ages, no matter your income or asset level.


News and Notes....The number of centenarians has jumped 4.4% since 2000 to 72,197 in 2014. (Centers for Disease Control)

MILLIONAIRES - Taxpayers that reported at least $1 million of adjusted gross income in tax year 2013 paid 24% of all federal income tax that year at an effective tax rate of 31% (source: Internal Revenue Service).

NOT MILLIONAIRES - Taxpayers that reported less than $50,000 of adjusted gross income in tax year 2013 paid 6% of all federal income tax that year at an effective tax rate of 11% (source: Internal Revenue Service).

NOT BIG EARNERS - 85% of the 52.8 million tax returns filed in 2013 that did not pay any federal income tax reported less than $30,000 of adjusted gross income (source: Internal Revenue Service).

MAJORITY PAY NOTHING - 67% of the 67.8 million tax returns filed in 2013 that reported less than $30,000 of adjusted gross income did not pay any federal income tax (source: Internal Revenue Service).

TEN YEARS, NO GROWTH - The median sales price of existing homes sold nationwide during the month of October 2015 was $219,600. The median sales price of existing homes sold nationwide during the month of October 2005 (i.e., 10 years ago) was $229,000 (source: National Association of Realtors).

IMPACT OF INFLATION - An adjusted gross income (AGI) of $80,580 was required to rank in the top 1% of US taxpayers in 1980. An AGI of $74,955 was required to rank in the top 25% of US taxpayers in 2013 (source: Internal Revenue Service).

WHAT THE WEALTHY DO - 17% of the net worth of American households is held in pre-tax accounts, e.g., pension plans, 401(k)s, IRAs. However, the top 1% of American households (ranked by wealth) has only 8% of their net worth in pre-tax accounts (source: Federal Reserve).

THE LONG-TERM AVERAGE - The S&P 500 stock index has gained an average of +9.7% per year (total return) over the last 50 years (i.e., the years 1966-2015). The stock index has been positive for the last 7 years (i.e., 2009-15) and 12 of the last 13 calendar years. The S&P 500 has up during 39 of the last 50 years, i.e., 78% of the time (source: BTN Research)

LET’S GO - For every 7 families that moved into Oregon last year, just 3 families moved out, making Oregon the “top moving destination” state. For every 1 family that moved into New Jersey last year, 2 families moved out, placing New Jersey last on the same list (source: United Van Lines).


Kudos Corner - Celebrating gifts of all types and sizes

In this section I periodically highlight some recent gift expectancies and gift program elements I think will be helpful and informative, not all gifts are included.

Evangelical Hospital, Donna Schuck, VP/Chief Development Officer, finalized a $10,000 gift annuity agreement from a 74 year old female, the original presentation was made over a year ago which is an example of the patients it takes working with prospects to finalize a gift agreement.



James E. Connell and Associates is a national consulting service devoted to increasing resources for charities using the power of charitable estate and gift planning techniques.

Pinehurst office: PO Box 3335, Pinehurst, NC 28374
Phone: 910-295-6800

Northeast office: 20982 Bayside Avenue, Rock Hall, MD 21661

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