IRA Charitable Rollover

Posted by Spalding Hurst

November 14, 2023

A Win-Win for Donors and Charities Alike

An End-of-Year Giving Option

Long-time donor Mary has always been a prudent saver. Now, as she’s older than 72, she faces a common dilemma: the government’s required minimum distribution (RMD) from her IRA. Mary, a passionate supporter of the Sisters of Charity of Nazareth, worries that the tax implications of her RMD might limit her ability to contribute to the causes she holds dear. However, the solution lies in a simple, yet powerful tool: the IRA charitable rollover.

Using Your IRA for Good

For those with an IRA, the annual RMD can often mean a higher tax bill. Failing to withdraw the RMD can result in severe penalties. Fortunately, the IRA charitable rollover offers a tax-savvy way to fulfill these requirements while supporting charitable causes.

This option became available thanks to a specific law passed by Congress. It allows individuals aged 70½ or older to direct a portion or all of their RMD – up to $100,000 per year – to a qualified charity like the Sisters of Charity of Nazareth. This move not only satisfies the RMD but also excludes the transferred amount from taxable income, a double benefit for the donor.

How It Works

  • Direct Transfer: You can instruct your IRA administrator to make a direct transfer to the charity of your choice. This can be up to $100,000.
  • Tax Benefits: The transferred amount is excluded from your taxable income. This is advantageous over a regular withdrawal, where you would pay income tax and then donate, without receiving a corresponding income tax deduction.
  • Fulfilling RMD: The amount transferred counts towards your RMD, helping you meet these mandatory withdrawal requirements.
  • Making an Impact: Inform the charity about how you wish your gift to be used, ensuring it supports the areas you’re most passionate about.

Learn More

If the idea of reducing your tax burden while supporting the Sisters of Charity of Nazareth appeals to you, an IRA charitable rollover might be an ideal choice. To learn more about how this can help you meet your RMD requirements and support a noble cause, please contact us at (502) 348-1593. For more information about our events, missions, and how you can contribute, visit our website or contact us at P.O. Box 9, Nazareth, KY 40048.


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