IRA Qualified Charitable Gifts
The Consolidated Appropriations Act of 2016 finally made permanent qualified charitable distributions (QCDs) from individual retirement accounts. Because QCDs are finally permanent, now’s a good time to review the rules.
Benefits of QCDs
A QCD permits annual direct transfers to a qualified charity such as Fairleigh Dickinson University (FDU) totaling up to $100,000 of tax-deferred IRA savings. Funds that have been distributed from the IRA to the IRA owner and are then contributed to the University can’t so qualify. QCDs offer advantages over contributing the proceeds of a taxable IRA distribution to FDU. QCDs automatically satisfy required minimum distributions (RMDs) for the year when the QCD is made. There are some restrictions, which a tax professional can enumerate.
Making the Donation
Retirees age 701/2 and older may donate up to $100,000 tax free from their IRA each year. Generally, when you take a distribution from your IRA, it is treated as taxable income. Under this provision those assets are excluded from income if the distribution is made directly to charity. Distributions excluded from income are also equivalent to a 100% deduction. As always, you should talk with your financial representative or tax advisor before making a decision that alters your tax situation.
Guidelines
- Eligibility: IRA account owner much be age 70½ or older at time of IRA distribution in order to take advantage of this provision. Rule applies only to Tradition, Rollover, and Roth IRAs, SEPs and SIMPLE IRAs are generally excluded. Distributions of non-deductible IRA contributions also do not apply.
- Annual limit: Maximum amount of a taxpayer’s qualified charitable distribution must not exceed $100,000 per tax year and may include required minimum distribution (RMDs).
- Qualifications: Distributions must be made to a qualifying charity such as Fairleigh Dickinson University; private foundations and donor-advised funds are not eligible. Consult a tax professional for additional information.
Delia G. Perez, CFRE
Director of Planned Giving Office of Gift Planning
800-980-0064
dgperez@fdu.edu
Fairleigh Dickenson University
Tax ID Number: 22-149-4434