IRA Rollover

Charitable IRA Rollover Gifts or Qualified Charitable Distributions

If you are at least 70.5 years of age, you could benefit through a gift of a Charitable IRA Rollover or Qualified Charitable Distribution (QCD).

IRA charitable rollover’s are a great way for qualified donors to make outright gifts of up to $100,000 per year to NYSCF from their IRA and avoid taxation on the distribution.  These charitable distributions also help satisfy the donor’s required minimum distribution (RMD) for the year.

To benefit from this gift opportunity, the following qualifications must be met:

  • Donor must be age 70.5 years of age or older at the time of transfer.
  • The maximum amount a donor may transfer is $100,000.
  • The gift must be outright. Gifts to donor advised funds or to life income vehicles do not qualify.
  • The gift must be transferred directly from the IRA account by the IRA administrator to NYSCF.  Donors with check-writing ability for their IRAs may also use this feature to complete their gift.

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
Jane is 73 years old and wants to make a gift to NYSCF. She has $725,000 in her IRA and wants to gift $20,000. She can authorize the administrator of her IRA to distribute $20,000 to NYSCF. Because the IRA Qualified Charitable Distribution is excluded from income, Jane will not be eligible for a charitable income tax deduction — but she will still receive tax savings because the $20,000 distributed to NYSCF will be counted toward her annual minimum required distribution and she will not pay income tax on the portion given to NYSCF.

What are the tax implications?

Federal: You do not recognize the distribution to NYSCF as income, provided it goes directly from the IRA administrator to us. Therefore, you are not entitled to an income tax charitable deduction for your gift.

State: Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this distribution as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their income tax on the federal income or federal tax paid. Some states have no income tax at all.

Does this transfer qualify as my required minimum distribution?

Yes. Once you reach 70.5 years of age, you are required to take minimum distributions from your retirement plans each year according to a federal formula. QCDs count toward your minimum required distribution for the year in which you make the gift.

Can my spouse also make a Qualified Charitable Distribution?

Yes, every individual who is the owner of a traditional IRA can use the Qualified Charitable Distribution for up to $100,000 each year.