IRA CHARITABLE ROLLOVER

What Is an IRA Charitable Rollover?

Traditional IRAs require you to make Required minimum distributions (RMDs) once you reach age 70.5. Because you did not pay federal income tax when you contributed the money to your account, you need to pay tax when you withdraw it.

 

However, you can avoid the tax on that distribution by making a donation directly from your IRA to a charity. This is called an IRA charitable rollover, though you may sometimes see it referred to as a qualified charitable distribution (QCD).

This means that rather than paying tax on the money, it goes directly to a cause you believe in and want to support. This could also have the effect of reducing the impact of some tax credits and deductions such as Social Security and Medicare.

How it works:

  • People age 70 1/2 or older can make a gift of up to $100,000 by donating IRA assets to their favorite charity. If married, each spouse can transfer up to $100,000 from their IRA.

  • IRA Charitable Rollover gifts must be made directly from the IRA custodian to the charity.

  • IRA Charitable Rollover gifts count toward your annual mandatory distribution from your IRA and do not result in you recognizing taxable income on the distribution. As you recognize no income, they also do not generate a charitable income tax deduction.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

 

 

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WORLD MEDICAL RELIEF, INC.