If you or your spouse are 70½ or over, under new tax law you can “roll over” up to $100,000 per year without paying any tax on the transaction when you transfer the funds directly from your IRA to Children’s Home & Aid.
Qualified Charitable Distributions: An IRA Gift Eliminates Tax Penalties and Saves Costs
A Qualified Charitable Distribution (QCD) is an otherwise taxable distribution of up to $100,000 from an IRA owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified public charity like Children’s Home & Aid. This giving strategy will allow you to achieve your charitable goals while securing a significant cost and tax consequence savings for you and your family. These tax and cost savings are realized whether or not you itemize deductions on your income tax.
Making a QCD has three primary tax and cost savings benefits for you.
- A QCD, unlike other IRA transactions, does not qualify as income for tax purposes; the transaction is not taxed in any way.
- A QCD counts towards your minimum required distribution for the year, which would otherwise be taxable income.
- A QCD will reduce your Adjusted Gross Income (AGI) by the contributed amount, which provides significant cost savings. Your AGI determines how much of your Social Security is subject to income taxes, if you will be subject to the Net Investment Income Tax, and the amount of your Medicare premiums in the following year. Reducing your AGI can helps lower these associated costs.
This Year, Turn Your Tax Burden into a Brighter Future for Every Child!
Is this a one-time gift or can I make gifts over multiple years?
Now you can reliably plan charitable IRA rollover gifts, year after year. As of 2015, new Federal law extends the charitable IRA rollover provision indefinitely — with no expiration date — allowing individuals to make qualifying gifts every tax year.
Can I make and fulfill a multi-year pledge with a Qualified Charitable Distribution?
You can honor your gift pledge to Children’s Home & Aid with one or more qualified charitable IRA rollover transfers of up to $100,000 per person, per calendar year. You can direct your IRA provider to transfer your charitable gift to Children’s Home & Aid quarterly, annually, or other timing that works for you. Simply have your servicer/provider indicate that the transfer is a gift from you.
Can I use a rollover to pay for event tickets or sponsorship?
No, per IRS rules donor cannot receive any goods or services in exchange for their IRA rollover donation.
How do I make the QCD gift from my IRA to Children’s Home & Aid?
Funds must be transferred directly from the IRA to Children’s Home & Aid to qualify for the tax benefits. If you withdraw the money from your IRA and later donate it, it won’t qualify as a tax-free qualified charitable distribution. To plan your Qualified Charitable Distribution from your IRA this year, simply contact and/or share the enclosed form with your IRA servicer/provider or Financial Planner.
Please note that your IRA servicer may have a separate form for you to complete; this card should provide you with all the info you need to complete any such form.
If you require any additional information or have any questions, please do not hesitate to contact Mary Kozil at Children’s Home & Aid at firstname.lastname@example.org or 312-424-6836.