Required Minimum Distribution
Donating to Immaculate Conception using a Qualified Charitable Distribution (QCD)
If you are age 72 or older, the IRS requires you to take a taxable required minimum distribution (RMD) each year from your tax-deferred retirement accounts. If you are age 70½ or older, you can contribute any amount up to $100,000 per year from your Traditional IRA directly to Immaculate Conception, or other qualified charities, without having to pay income taxes on that portion of the IRA distribution. This popular gift option is commonly called the IRA charitable rollover, but you may also see it referred to as a qualified charitable distribution, or QCD.
Why Consider This Gift?
- Making a Qualified Charitable Distribution (QCD) is a tax-wise strategy. Any amount up to $100,000 processed as a QCD counts toward your RMD, and reduces the taxable amount of your IRA distribution. The QCD lowers both your adjusted gross income (AGI) and taxable income, resulting in a lower overall tax liability. It may also save you on the Medicare surtax (IRMAA) and tax on Social Security benefits, depending on your annual income level.
- Beginning in the year you turn 72, you can use your gift to satisfy all or part of your required minimum distribution (RMD).
Frequently Asked Questions
- I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes. Direct gifts to a qualified charity can be made only from a Traditional IRA. Under certain circumstances, however, you may be able to roll assets from a pension, profit sharing, 401(k) or 403(b) plan into an IRA and then make the transfer from the IRA directly to Immaculate.
- How do I transfer my QCD to Immaculate?
A. For a QCD to count toward your current year’s RMD, the funds must be transferred directly from your IRA to Immaculate by December 31. To be tax-free, the donation must go directly from your IRA account to Immaculate without passing through your hands.
- Can my gift be used as my required minimum distribution under the law?
A. Yes, absolutely. Beginning in the year you turn 72, you can use your gift to satisfy all or part of your required minimum distribution.
- Can I make a QCD before age 72?
A. To qualify for a QCD, you must be 70½ or older by the date you make the gift.
- Do I need to contribute my entire IRA RMD to be eligible for the tax benefits?
A. No. You can give any amount under this provision, as long as it is $100,000 or less per year.
- Contact Jackie Ross at 973-744-7445 x31 or [email protected] for additional information on making a gift from your IRA.
- Seek the advice of your financial or legal advisor.
- Ask your IRA administrator about making a direct transfer to Immaculate or have the administrator send a check from your account to Immaculate Conception High School.
- You will receive a special acknowledgement letter from Immaculate noting that you made a QCD. It’s important that you keep this letter for your tax records or share it with your tax preparer since your IRA custodian is not required to specifically account for QCD on your annual 1099-R form.
The information in this letter is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor.