IRA Qualified Charitable Distribution (QCD)
Now you can use your traditional IRA to help provide for the defense of public education, religious freedom, and individual liberties. Best of all, you will owe no federal income taxes on your distribution, as well as avoid potential future estate taxes.
The Protecting Americans from Tax Hikes Act of 2015 allows individuals 70½ or older to make QCD gifts directly from a traditional IRA account without incurring federal income tax on the withdrawal. The IRA provides you with an excellent opportunity to make a gift during your lifetime from an asset that would be subject to multiple levels of taxation if it remained in your taxable estate.
To qualify:
- You must be age 70 ½ or older at the time of gift.
- Transfers must be made directly from a traditional IRA account by your IRA administrator to the TFN Education Fund. Funds that are withdrawn by you and then contributed do NOT qualify. Gifts from 401(k), 403(b), SEP, and other plans do not qualify.
- Gifts may be outright. Distributions to donor-advised funds are not allowed.
- Distributions to certain life-income arrangements such as charitable remainder trusts and charitable gift annuities are also possible within limitations. To find out more about these opportunities, please contact Shannon Young at (512) 212-5031.
Benefits:
- Direct distributions to charities can total up to $105,000 each year. This number is re-evaluated by the IRS annually.
- Distributions to Charitable Remainder Trusts and Gift Annuities are limited to $53,000, and can only be accomplished once in a lifetime.
- They are not included in your gross income for federal income tax purposes on your IRS Form 1040 (no charitable deduction is available, however).
- If you are required to make a minimum contribution distribution (RMD) from your IRA each year, a QCD will count towards the RMD.
How do I make a gift?
What is the procedure to execute an IRA QCD?
We offer a sample letter you can send to your plan provider to initiate a gift. Make sure that you contact TFNEF when you direct the distribution so we can look for the check from your IRA administrator.
You should consult with your tax advisor about the benefits and restrictions associated with this type of giving. Please contact our Development Office at (512)-212-5031 if you are interested in making a donation using this provision or if you would like more information.
