If you get cross-eyed when you start reading about Required Minimum Distributions (RMDs) and Qualified Charitable Distributions (QCDs), you are not alone! Given the December 2022 passage of SECURE 2.0 legislation, changes to RMD rules are especially important to understand if you are involved in charitable giving and have reached the age of 70 1/2. 

What is an RMD in the first place? 

A little history may help here. RMDs date back to 1974 when the Employee Retirement Income Security Act (ERISA) was enacted. This was to provide pension reform and to offer a retirement savings vehicle to non-pensioned workers through vehicles referred to as “qualified retirement plans,” which are allowed to grow tax-free while assets are in the plan. 

By requiring that a taxpayer start taking distributions from qualified retirement plans when the taxpayer reaches a certain age, the United States government can start collecting tax revenue on “required minimum distributions” from assets which have grown tax-deferred for all those years.  

Now here is where we get into the weeds…The distributed amount of the RMD is reported by the plan administrator on IRS Form 1099-R. But not if the RMD was “satisfied” by a Qualified Charitable Contribution (QCD)—see below! A taxpayer enters this amount on Line 4B of the Form 1040 Federal income tax return, and, of course, the amount is included as taxable income for the year it was distributed. The net-net here is that RMDs add to taxable income but not in the case of direct transfers to qualifying charitable organizations (the QCD.)

You still with us? 😊 

What types of accounts require RMDs?

For 2023, account owners aged 73 and older who participate in qualified retirement plans such as these are subject to RMDs: 

  • Traditional IRA
  • Simplified Employee Pension (SEP)
  • SIMPLE IRA
  • Employer-sponsored 401(k), 430(b) or 457

Once begun, RMDs occur annually, until account depletion or the owner’s death. (Distributions must also be taken from inherited IRA accounts, though under different rules.)

How is the RMD amount calculated? 

A qualified retirement account’s entire balance is considered for calculating an RMD, although of course only a fraction of the balance must be distributed each year. Unfortunately, the distribution amount is not easily or consistently determined. This contributes to some retirees’ confusion about RMDs and the requirements. Online RMD calculators can be found here or here, and your retirement account administrator can provide guidance. 

When do the RMDs start? 

That’s tricky too! For years 2023 – 2032, the start date is your age: 73 calendar year. For example, an account owner born in 1955 would begin in 2028. 

The big benefit of a later RMD start age comes from retaining account balances longer. You avoid adding unnecessarily to your taxable income and therefore reduce the risk of bumping to a higher tax bracket. Prior to SECURE Act changes, RMDs began at age 70 ½ and age 72. So taxpayers can now enjoy a few more years of tax-free investment growth. 

How charitable taxpayers can check the RMD box with a QCD

Here’s where the QCD comes in (finally!) Armed with an understanding of how the RMD rules apply to your situation, you can begin to see how the QCD can provide a huge benefit if you own IRAs. QCDs are truly taxpayer and charity-friendly vehicles. 

For starters, you can start making QCDs at age 70 ½ – well before you’ve reached the age when you’re required to take RMDs. A QCD happens when you direct a distribution from an IRA of up to $100,000 annually (or $200,000 if you file tax returns jointly) to one or more qualifying charitable organizations.

These organizations can include a designatedfield-of-interest, or unrestricted fund at the Community Foundation. While the QCD is itself not tax deductible per se, the overall effect of the QCD lowers your taxes since the QCD counts toward your RMD but, unlike an RMD, is not included in your taxable income. 

Whew!

The bottom line? If you have:

  • reached the age of 70 1/2,
  • own an IRA,
  • care about charitable causes,
  • and don’t need a full RMD as income to cover your living expenses,

reach out to the team at the Community Foundation to learn how a QCD could work beautifully for you!  

Ready to make a QCD right now? We make it EASY to recommend QCDs from your IRA with just a few clicks! 

We look forward to working with you and your family this spring to set in motion your charitable goals for 2023! Please reach out anytime.

CHEROKEE VILLAGE, ARK. (April 12, 2023) – Dan Milligan of Cherokee Village, has been named executive director of Sharp County Community Foundation, an affiliate of Arkansas Community Foundation that supports countywide nonprofit organizations through funding, networking and capacity building opportunities.

“We are thrilled to have Dan join Sharp County Community Foundation as Executive Director,” said Molly Day, SCCF Chairman. “His energy and passion for philanthropy and community development will be tremendous assets for our organization as we continue to grow our endowment and our reach.”

Milligan relocated to Cherokee Village in 2021 after spending much of his life vacationing in the Spring River area. He graduated from the University of Wyoming with a bachelor’s degree in mechanical engineering and spent the early part of his career with a start-up software company. In his roles there, Milligan had the opportunity to provide software solutions to high-tech aerospace and automotive companies.

“Dan brings experience leading and volunteering in the nonprofit sector to our organization,” said Heather Larkin, president and CEO of Arkansas Community Foundation. “His leadership and philanthropic experience will prove to be extremely valuable to the Foundation. We are grateful he is on our team.”

Milligan developed a passion for volunteering early in life and has worked with nonprofits such as Habitat for Humanity and Special Olympics. More recently, he has become a leader in Sharp County by serving on the board of directors for his local homeowner’s association. Dan is an avid sports enthusiast, taking advantage of year-round golfing and getting outside under the sun as much as he can.  

Sharp County Community Foundation was established in 2007 and is governed by a local board of directors. For more information about the Foundation’s work in Sharp County, including information about local grants and how to apply, visit www.arcf.org/sharpcounty or call 870-290-3178.

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Arkansas Community Foundation, a statewide nonprofit organization, provides resources, insight and inspiration to build better Arkansas communities – communities where our kids will want to raise their kids. The Community Foundation is the largest grantmaker in the state in the number of grants made each year. Since 1976, the Foundation has provided more than $393 million to nonprofits. The Foundation staff works directly with donors, professional advisors and nonprofits to help strengthen Arkansas communities through strategic philanthropy and focusing on local needs. Its assets rank among the top 60 out of more than 800 community foundations in the United States. Serving statewide and local initiatives, the Community Foundation helps connect those who want to give to causes they care about. Contributions to Arkansas Community Foundation, its funds and any of its 29 affiliates are fully tax deductible.

WYNNE, ARK. – (April 7, 2023) – Cross County Community Foundation has established two funds for recovery for nonprofits serving those affected by the tornadoes on March 31. The county has been declared a federal disaster area. Donations can be made to the following funds.

Cross County Tornado Recovery Fund – to support short and long-term needs for the Cross County community. Visit www.arcf.org/crosscountyrecovery to make a donation.

Wynne Public Schools Tornado Relief Fund – to support the rebuilding efforts of Wynne Public Schools. Visit www.arcf.org/wynneschoolsrecovery to make a donation.

The Foundation is waiving all fees associated with donations to these funds.

“We have been serving Cross County nonprofits for more than 20 years,” said Keeli Smith, executive director of Cross County Community Foundation. “Wynne was hit hard but the people here are resilient and coming together to help. The funds established through the Foundation will help now, but also for longer term recovery.”

Cross County Community Foundation’s Board will review and make grants from the Cross County Tornado Recovery Fund to nonprofits serving those affected in Cross County. The Wynne Public Schools Tornado Relief Fund is a designated fund specifically for helping the Wynne Public School District in their rebuilding efforts.

Cross County Community Foundation does not do direct programming or immediate relief work. Rather, we focus on long-term and intermediate recovery. We make grants to organizations working to serve the affected areas.

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Arkansas Community Foundation, a statewide nonprofit organization, provides resources, insight and inspiration to build better Arkansas communities – communities where our kids will want to raise their kids. The Community Foundation is the largest grantmaker in the state in the number of grants made each year. Since 1976, the Foundation has provided more than $393 million to nonprofits. The Foundation staff works directly with donors, professional advisors and nonprofits to help strengthen Arkansas communities through strategic philanthropy and focusing on local needs. Its assets rank among the top 60 out of more than 800 community foundations in the United States. Serving statewide and local initiatives, the Community Foundation helps connect those who want to give to causes they care about. Contributions to Arkansas Community Foundation, its funds and any of its 29 affiliates are fully tax deductible.

In the aftermath of the tornadoes that ripped through Central Arkansas on March 31, the Foundation has taken steps to help support local residents through nonprofit organizations in the wake of this devastating storm.

Here is how you can help. 

For longer term recovery efforts, Arkansas Community Foundation has established three funds. Click on the fund name below to donate:

The Foundation is waiving all fees associated with donations to these funds.

For more information on the “To Little Rock With Love” concert fundraiser on April 12, click here.

For short term recovery efforts, we ask that you donate to trusted organizations doing frontline immediate relief work. You can find a list of organizations here

Arkansas Community Foundation does not do direct programming or immediate relief work. Rather, we focus on long-term and intermediate recovery through grantmaking to organizations working to serve the affected areas.

Cross County Community Foundation’s Board, with the support of the State office will make grants from the Cross County Tornado Recovery Fund and the Wynne Public Schools Tornado Recovery Fund to nonprofits serving those affected in Cross County. The State office (Little Rock) will make grants from the Central Arkansas Recovery Fund to nonprofits serving those affected in central Arkansas.

Arkansas Community Foundation is a nonprofit organization eligible to receive tax-deductible donations. Each donation to the Foundation is tax-deductible to the extent allowed by law. All donations made to any tornado recovery fund will be granted to Arkansas nonprofits working to serve the those in Pulaski, Lonoke and Cross County that were directly affected by the tornadoes. 

Tornadoes passed through Central Arkansas and Cross County on March 31, 2023 causing mass devastation and injuries. Pulaski and Cross counties have both been declared disaster areas by state and federal governments. Many are asking how they can help.

Below are links to several local nonprofits that will help the people in need most in the aftermath.

If you’re aware of nonprofit organizations such as churches, schools or other municipalities working to help, please contact Jessica Ford at jford@arcf.org or call 501-372-1116 to have them added to the list.

For donations to most state and federal agencies, you can designate your fund to the community/area you prefer.

Arkansas Community Foundation does not do direct programming or immediate relief work. Rather, we focus on long-term and intermediate recovery.

Lawrence Fikes has been the executive director of the Pine Bluff Area Affiliate since 2015. “For the first time, fiscal year 2022 saw our affiliate grant over $100,000 to local nonprofits and in scholarships — and we’re on track to do the same in fiscal year 2023,” Lawrence said.

The Pine Bluff Area Community Foundation is one of the longest serving affiliates of Arkansas Community Foundation. And one of the most active. The affiliate’s 15-person board recently completed a rigorous strategic planning process and has begun putting their strategy into action.

“We want to broaden the awareness of the Foundation — not just for donors, but community leaders,” said Glenn Freeman, affiliate board member and longtime supporter of the Community Foundation. “If there is a group or person trying to do good work here, we want to know about it, and we want them to come to us so we can collaborate.”

Pine Bluff is not wealthy,” he said. “But there is tremendous opportunity and a chance for us to make an impact.”

Rebecca Pittillo leads the affiliate board as chair. “One of the most important things we can do is listen,” she said. “Community leaders must listen to the problems before they can offer solutions.”

Both longtime supporters of the Community Foundation, Rebecca Pittillo and Glenn Freeman are standing in the new ART SPACE in downtown Pine Bluff.

The Pine Bluff Area affiliate is active in making grants through the lens of their strategic plan. Lawrence Fikes leads the affiliate as executive director. “For the first time, fiscal year 2022 saw the Pine Bluff affiliate grant over $100,000 to local nonprofits and in scholarships — and we’re on track to do the same in fiscal year 23,” he said. “Our board focuses on community development, family, education, health and food insecurity with our grantmaking.”

“We work hard to make it easier for nonprofits, especially through the Giving Tree grants.” Pittillo said. “We make the application process simple, and the turnaround time quick. That ease and speed yield higher impact.

“Our board is dedicated to the work we have before us,” said Pittillo. “I believe the future is bright for this organization and the Pine Bluff community.”

Financial advisor Robert Zunick of Hot Springs works directly with Arkansas Community Foundation to serve his clients’ charitable giving goals.

“The Community Foundation is just the best vehicle for my client’s charitable giving — especially for long-term impact. Establishing an endowment is the most efficient way to give in perpetuity,” Robert said.

“Early in my career as an investment broker, I had a client who was a good candidate for a permanent endowment fund,” he said. “A colleague suggested the Community Foundation and I’ve been working with them since.”

A founding member of the Hot Springs Area affiliate board, Zunick has more than three decades of experience providing financial advice to his clients, and almost that much time supporting local causes as a philanthropist in his own right.

“When the Hot Springs Area affiliate was formed in 1991, there was one endowment. Today, there are 117 funds, and several scholarships,” Robert explained. “I’ve enjoyed watching that growth and being part of helping nonprofits in this area.”

Robert Zunick, part owner of the Waters Hotel, stands atop the historic building overlooking downtown Hot Springs.

The Foundation accepts a variety of gifts so that clients can give back while Robert stays in control of the client relationship. Through the “Separately Managed” program, he can invest his client’s charitable dollars and retain the investment portfolio while they give through a fund with the Foundation.

“Whether my clients are looking to lighten their tax burden, shift financial resources during retirement, or create a legacy of giving, the Foundation makes it simple,” Robert said.

Arkansas Community Foundation recognizes professional advisors who refer clients for charitable giving in the “Golden Key Society.” Robert has been part of the Society for years. He “walks the talk” by not only referring clients, but also by holding his own fund at the Foundation. He and his wife Mary are members of a Hot Springs Giving Circle and support a variety of causes.

“Mary and I give each year to several Hot Springs nonprofits, but one of our greatest passions is the arts,” Zunick explained. “Sometimes the arts get put on the back burner. I believe we owe a debt to artists of the past, and the best way to keep the arts alive is to support artists of now.”

Robert encourages other financial advisors to listen and learn about the benefits of working with the Community Foundation. “The Foundation staff are so knowledgeable about local causes and ways to give,” Robert said. “They help my clients realize tax benefits, but also give them a vehicle for their charitable intent.”

Deborah Knox has a long history of community leadership and service to Mountain Home. As a founding member of the Twin Lakes Area affiliate twenty years ago, she has supported dozens of local causes by being a do-er, donor and door-opener.

“Growing up, I always had a sense that I wanted to make the world a better place,” Knox said. “Being on the board for the local affiliate has shown me the breadth of need here locally. Most people don’t know how deep the needs of people run in the Twin Lakes area—for example, the percentage of people suffering from food insecurity in Baxter County is almost 16%.

“But one benefit of living in a small community — you can see impact easier.”

The number of causes she’s worked with in 39 years as a resident of Mountain Home is vast. A former practicing attorney, she helped start the Baxter County Library Foundation and served as a justice of the peace. She currently sits on several boards including the Arkansas State Library Board, is a Rotarian, active in her church and now serves as a member of the newly formed homelessness taskforce.

Deborah and Tom Knox prepare to hit the open road.

“There are so many great organizations in this area working hard to make a difference,” she said. “Tom [her husband] and I have an endowment in memory of his three brothers that supports hospice. We have a Charitable Remainder Trust to be administered by Arkansas Community Foundation which will benefit our church and the Baxter County Library Foundation.”

Helping improve early childhood literacy is one of her passions — seen in her work to support the library in Baxter County.

“I helped start the Baxter County Library Foundation. We sought a grant from the Donald W. Reynolds Foundation for the purpose of building a new library facility. We received $10 million from Reynolds, but we also had to raise $2 million locally. I chaired the campaign to help raise those funds,” Knox recalled. “I had never raised money before like that. It pushed me out of my comfort zone and challenged me, but we got it.”

When asked what “community leadership” means, she said, “When you see a need, you can’t unsee it. You have to put your efforts into meeting that need. It can be alone, or with others, but you must find a way to help. The Community Foundation makes this easy. It is a great vehicle to connect those that want to help, with those who need it.

“Tom and I have two grandkids, Wally and Graeme,” she said. “I want to show them that it’s as fulfilling to give as it is to receive.”

Philanthropy Club is a group of individuals who gather each month to learn about the needs in the community and how various local nonprofits are uniquely equipped to address those needs. Unlike a “giving circle” which pools financial resources and makes contributions together, members of Philanthropy Club individually decide if and how they might support the organizations they visit.

Danyelle Musselman poses near the student section in Bud Walton Arena.

Since Danyelle Musselman moved to Arkansas, she’s found herself in a new position. Not only as the first lady of Arkansas Razorback basketball but now in a position to give.

“I had a new problem all of a sudden, in that for the first time I really needed to get my charitable giving organized,” the head coach’s wife said. “I was introduced to the Foundation by attending Philanthropy Club where I met (Community Foundation VP) Jody (Dilday) and she broke it all down for me.”

Soon after, she and her husband Eric started the Muss Bus Charitable Fund through Arkansas Community Foundation. “The Foundation is my easy button! Nothing is too big or small. Through the Philanthropy Club, I have been exposed to so many good causes in this area,” Musselman said. “It is easy to stay caught up in one’s own bubble, but the Club has shown me new people, challenges and solutions that are happening here. For example, the work being done with the Marshallese community, the Samaritan Community Center and the Cancer Support Home — to name a few. We’ve seen dozens of organizations doing good work.”

When asked “What hits home?’’ She is quick to answer. “Organizations that support cancer patients and their families. My mother is a breast cancer survivor and both of her parents died of cancer when she was young. Many offshoots of the American Cancer Society are doing amazing work. One organization provides wigs for patients that have brown and black skin which are hard to find, so I loved supporting that.”

Musselman is spreading her philanthropic influence in other states, as well. “An unintended outcome of the Muss Bus Charitable Fund is that other coaches’ wives across the nation have seen what we’ve done and are starting to do it, too. We’ve connected these coaches’ families to their own local community foundation,” she said. “My instructions to Eric: win games! That keeps people drawn to what I’m doing and keeps the energy going. We also involve his players in local service projects.

“I hope we can continue to grow our giving here and keep learning about more causes,” Musselman remarked. “I’m not a native Arkansan, but it is amazing to see how people here rally around one another to help.”

The future of the Muss Bus Charitable Fund is bright — not only for Danyelle and her philanthropic interests, but the next generation of Musselmans, too. “My daughter, Mariah, is 12. She often goes with me to events and can see the needs that local nonprofits are working to fix,” Musselman said. “Hopefully by exposing her to these causes and modeling how one can give back, she will be inspired to do the same.”