Charitable Gifts through Your IRA
If you are 70 ½ or older, you may be interested in a way to lower the income and taxes from your IRA withdrawals.
Through an IRA Charitable Rollover, you can transfer up to $100,000 a year directly from your IRA to a qualified 501(c)(3) nonprofit, such as Pisgah Legal Services. The amount of the transfer will not be included in your taxable income and the transferred amount can count towards your required minimum distribution.
Who qualifies? Individuals who are 70 ½ or older at the time of the contribution
From what accounts can I make transfers? Transfers must come from your IRAs directly to the charity. If you have retirement assets in a 401(k), 403(b), etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to the charity.
To what charities can I make gifts? Tax exempt organizations that are classified as 501(c)(3) charities, to which deductible contributions can be made
What are the tax implications to me?
- Federal—The transfer to the charity is not recognized as income, provided it goes directly from the IRA provider to the charity.
- State—Each state has different laws so consult with your own advisors.
Does this transfer qualify as my minimum required distribution? Yes, once you reach 70 ½, you are required to take required minimum distributions from your retirement plans each year, according to a federal formula. IRA Charitable Rollovers count towards your required minimum distributions for the year. For people over age 70½ who would not otherwise be able to deduct their charitable contributions, the IRA qualified charitable distribution technique allows them to see the benefit of their gift, satisfy their required minimum distribution, and not have the distribution counted as income.
This information is not intended to be individual legal or tax advice. As always, please consult your tax advisor.
Pisgah Legal Services is a 501(c)(3) nonprofit organization, Federal ID # 56-1191115
Thank you for generously supporting the critical work of Pisgah Legal Services!