70½ or Older? Use Your IRA Funds for Tax-Advantaged Giving

Posted September 2023

If you are charitably inclined, own an individual retirement account (IRA), and are aged 70½ or older, you can make contributions directly from your IRA to qualified charitable organizations such as ours (excluding a donor-advised fund or a private foundation). Your contribution can be any amount up to $100,000 and may count toward your required minimum distribution (RMD), which begins at the age of 73. Following are some tips to help you take advantage of this easy way to give.

This gift is known as a qualified charitable distribution (QCD), and it has become a popular way to give to support our work. The amount you donate to us is not included in your taxable income. This can be especially advantageous if you are 73 or older because your RMD is subject to an income tax that can be as high as 37%, depending on your taxable income. However, by making a gift through your IRA via a QCD to support our work, you satisfy your RMD and your taxable income does not increase. Therefore, you do not incur any additional tax—which, in effect, is equal to an income-tax charitable deduction.

Generally, this process involves contacting your IRA administrator and completing a form with our organization’s name and address. It’s also a good idea to contact us about your pending gift, the amount of the gift, and the company issuing the check so we can provide you with the proper acknowledgment for your gift.

Because of the tax benefits and the relative ease of making a QCD, it’s a great way to make an annual gift. Some of our donors give a specific amount each year, while others donate their entire RMD amount (up to the maximum of $100,000).

Can you do more with the balance in your IRA? Yes! You can specify that the balance of your IRA be directed to one or more charities upon your passing. Usually, the process involves contacting your IRA administrator and completing a beneficiary-designation form. Qualified charities do not pay any tax on IRA proceeds, while individual beneficiaries would be taxed on the distributions (other than from a Roth IRA).

By using one or more of these options to make lifetime and/or testamentary gifts, you can create or expand your legacy by giving from your IRA—resulting in high-impact gifts that help the organizations you care about to fulfill their missions.

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