Qualified Charitable Distribution (IRA Charitable Rollover)

To qualify

• You must be 70½ or older at the time of gift.
• Distributions must be made directly from a traditional IRA account by your IRA administrator to Springbrook Foundation.
• Gifts must be outright, meaning they go directly to Springbrook Foundation. Distributions to donor-advised funds do not qualify.
• Gifts from 401(k), 403(b), "ongoing" SEP or SIMPLE IRAs, and other plans do not qualify. Ask your financial advisor if it would make sense for you to create a traditional IRA account so you can benefit from an IRA Qualified Charitable Distribution.

Tax Benefits

• IRA Qualified Charitable Distributions are excluded as gross income for federal income tax purposes on your IRS Form 1040.
• The gift counts toward your required minimum distribution for the year in which you made the gift.
• You could avoid a higher tax bracket that might otherwise result from adding an RMD to your income.

Example

John is 73 and wants to contribute $20,000 to Springbrook Foundation. He has somewhat over $500,000 in his IRA, and his minimum required distribution would be about $20,000. He can authorize the administrator of his IRA to transfer $20,000 directly to Springbrook Foundation in a "qualified charitable distribution" or QCD. John will not be eligible for a charitable income tax deduction, but because the entire amount of the QCD is excluded from income, he still receives tax savings. The $20,000 distributed to Springbrook Foundation will be counted toward his annual required minimum distribution (RMD), and he will not pay income tax on the portion given to charity.

Note: 73 is the age when required to take out the RMD. The earliest age John can withdraw voluntarily from his retirement is 59.5. And the earliest he can make a QCD is 70.5. These numbers can get confusing because if John is between 70.5 and 73, he can still make a QCD but will not enjoy the tax advantage if he is not taking out a distribution.

For more information, please contact us by phone at 607.286.7171 x295.

Important Notes:

If your administrator provides you an IRA checkbook, please note that the date of your QCD is NOT the date you send the distribution check, but the date that your IRA administrator transfers the funds to the charity. If you want your distribution check to be credited toward the current tax year, it is critical that you mail your check several weeks before the end of the year to ensure there is time for the check to be received by common reporting standards (CRS) and to clear your account. This is especially true if you are relying on those gifts to fulfill your required minimum distribution.

Be sure to check with your financial advisor to determine whether this gift plan is right for you. This information is not meant as tax or legal advice.