Tax advantages of an IRA charitable rollover gift to JAHA

Tax advantages of an IRA charitable rollover gift to JAHA

Posted: December 20, 2018 3:04 pm

If you are 70½ or older, an IRA charitable rollover is a way to lower the income and taxes from your IRA withdrawals.

With tax reform likely to lead more taxpayers to use the standard deduction instead of itemizing, the move known as the qualified charitable distribution (QCD) is particularly attractive. A QCD allows taxpayers claiming the standard deduction to get a tax break for giving to charity. But if you plan to make use of the tax move, you’ll need to check with your IRA custodian on its rules for how to fulfill the QCD.

The QCD lets you transfer money from your traditional IRA directly to a charity without the money being added to your adjusted gross income. You can donate up to $100,000 annually, but you must be 70 ½ or older to be eligible. A bonus: The money can count toward your required minimum if the QCD is made before satisfying your RMD for the year.

The QCD can’t be distributed to you first and then donated; instead, the money must be transferred directly to the charity, and if a check is issued, it must be made payable to the charity. If you have check-writing privileges on your traditional IRA, you may be able to write out the check to the charity yourself.

Benefits of an IRA charitable rollover:

  • Avoid taxes on transfers of up to $100,000 from your IRA to the Johnstown Area Heritage Association (JAHA).
  •  Satisfy your required minimum distribution (RMD) for the year
  • Reduce your taxable income, even if you do not itemize deductions
  •  Make a gift that is not subject to the deduction limits on charitable gifts
  • Help further the work and mission of our organization

How an IRA charitable rollover gift works:

1. Contact your IRA plan administrator to make a gift from your IRA to the Johnstown Area Heritage Association. Your IRA funds will be directly transferred to JAHA to support our important work.
2. Please note that IRA charitable rollover gifts do not qualify for a charitable deduction.
3. Please contact us if you wish for your gift to be used for a specific purpose.