Charitable Gifts through Your IRA
If you are 70 ½ or older, you may be interested in a way to lower the income and taxes from your IRA withdrawals.
Through an IRA Charitable Rollover, you can transfer up to $105,000 a year directly from your IRA to a qualified 501(c)(3) nonprofit, such as Pisgah Legal Services. The amount of the transfer will not be included in your taxable income and the transferred amount can count towards your required minimum distribution.
Who qualifies? Individuals who are 70 ½ or older at the time of the contribution
From what accounts can I make transfers? Transfers must come from your IRAs directly to the charity. If you have retirement assets in a 401(k), 403(b), etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to the charity.
To what charities can I make gifts? Tax exempt organizations that are classified as 501(c)(3) charities, to which deductible contributions can be made.
What are the tax implications to me?
- Federal—The transfer to the charity is not recognized as income, provided it goes directly from the IRA provider to the charity.
- State—Each state has different laws so consult with your own advisors.
Does this transfer qualify as my minimum required distribution?
The Required Minimum Distribution (RMD) is the smallest amount individuals must distribute from their IRA each year. As of January 1, 2023, the age to start taking RMDs increased from age 72 to age 73, with the exception of donors who turned 72 before January 1, 2023. QCDs can be counted toward satisfying your required minimum distributions for the year.
If you’re 70.5 or older, but you don’t have an RMD yet, you can still make a QCD. Doing so can lower your adjusted gross income and effectively reduce your income taxes.
To learn more, feel free to check out the IRS website for additional useful information on RMDs.
Questions? Contact Chief Development Officer Ally Wilson at 828-210-3444.
This information is not intended to be individual legal or tax advice. As always, please consult your tax advisor.
Pisgah Legal Services is a 501(c)(3) nonprofit organization, Federal ID # 56-1191115
Thank you for generously supporting the critical work of Pisgah Legal Services!