If you are at least age 70½, enjoy making gifts to charity, and don’t need your required minimum distribution for living expenses, the IRS has a tax saving gift for you. The “IRA charitable rollover,” technically known as a Qualified Charitable Distribution or QCD, has become the gift of choice for age appropriate charitably inclined individuals, and especially for taxpayers who no longer itemize deductions now that the standard deduction has been expanded.
Here are the requirements for a QCD gift:
- You must be 70½ or older at the time of the gift.
- Gifts must go directly from your IRA to Arcadia University.
- Gifts cannot exceed $100,000 per year per donor. Spouses with their own IRA accounts can make gifts of up to $100,000 per year from each of their respective accounts.
- You cannot take an income tax charitable deduction for your gift.
If you are taking the standard deduction and no longer itemizing your income tax charitable deductions, the QCD could be right for you. A QCD gift to charity is not included in your taxable income. The tax impact is as if you made a fully deductible gift to charity without increasing your income.
If you are age 73 or older and taking your Required Minimum Distributions (RMD), there is even better news. A QCD gift counts toward your RMD and is not included in your taxable income. Lower income may reduce taxes you owe for Social Security as well as your Medicare premiums. In addition to saving taxes, you will be making an immediate impact on our students and community at Arcadia University.
Your IRA administrator can help you make a Qualified Charitable Distribution from your IRA. Many administrators require you to use their QCD distribution form and comply with other requirements. Follow your financial institution’s forms and procedures to ensure you receive the tax benefits of a QCD.