Maximize your giving with an IRA charitable rollover

Posted by Spalding Hurst

December 16, 2022

Are you looking for a tax-effective way to make charitable donations and support causes you care about? Consider using an IRA charitable rollover, also known as a qualified charitable distribution (QCD).

An IRA charitable rollover allows individuals over the age of 70.5 to donate up to $100,000 per year to a qualified charitable organization without paying income tax on the distribution. This can be an excellent way for individuals to support the causes they believe in and potentially reduce their overall tax burden simultaneously.

But the benefits of an IRA charitable rollover go beyond just saving on taxes. By donating to a qualified charitable organization like the Sisters of Charity of Nazareth that focuses on social justice advocacy, individuals can make a meaningful difference in the lives of others and work towards creating a more equitable and just society.

For example, you could use an IRA charitable rollover to support organizations that are working to end racial discrimination, combat climate change, or protect the rights of marginalized communities. Through your charitable donations, you can help fund critical initiatives that are working to address some of the most pressing issues facing our world today.

In addition to the social impact it can have, an IRA charitable rollover can also be a convenient and efficient way to make charitable donations. By donating directly from your IRA account, you can avoid the hassle of writing a check or setting up a separate charitable fund.

Furthermore, for individuals who are required to take required minimum distributions (RMDs) from their IRA, an IRA charitable rollover can be a way to satisfy their RMD while also making a charitable donation. This can be a particularly appealing option for individuals who do not need the income from their RMD and would prefer to put it towards a good cause.

Overall, an IRA charitable rollover is a valuable tool that can not only provide tax savings but also have a transformative impact on the lives of others through social justice advocacy. By supporting organizations that are working to create a more equitable and just society, you can make a meaningful difference and leave a lasting legacy. So, consider using an IRA charitable rollover to make a difference and support the causes you care about.

To make an IRA charitable rollover, also known as a qualified charitable distribution (QCD), you will need to follow these steps:

  1. Check your eligibility: To be eligible for an IRA charitable rollover, you must be at least 70.5 years old and have an individual retirement account (IRA).
  2. Choose a qualified charitable organization.
  3. Contact your IRA custodian: Contact the financial institution or company that holds your IRA and request a QCD. You will need to provide the name and tax identification number of the charitable organization you wish to donate to.
  4. Decide on the amount of the QCD: You can make a QCD of up to $100,000 per year. You will need to specify the exact amount you wish to donate.
  5. Request the QCD: Once you have all the necessary information, request the QCD from your IRA custodian. You may need to fill out a form or provide written instructions for the distribution.
  6. Receive confirmation: Once the QCD has been processed, you should receive confirmation from your IRA custodian and a statement indicating that the QCD has been completed.

It is important to note that an IRA charitable rollover is not the same as a charitable contribution deduction, which can be claimed on your tax return. Instead, a QCD is an exclusion from income, which means it is not included in your taxable income. This can be a tax-effective way to make charitable donations, especially if you are required to take required minimum distributions (RMDs) from your IRA and do not need the income.

It is always a good idea to consult with a tax professional or financial advisor to determine if an IRA charitable rollover is the best option for your charitable giving strategy.

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