IRA Charitable Rollover
The IRA Charitable Rollover, or Qualified Charitable Distribution (QCD), allows owners 70½ or older of traditional and Roth IRAs the ability to distribute directly, or “rollover,” to certain public charities (including NVRH) up to $100,000 each year without the distribution being included as taxable income, but allowing it to count towards the annual required minimum distribution (RMD).
Contact your IRA Administrator to request an IRA rollover gift be made to NVRH. For your convenience, download a sample letter here here that you can provide to your IRA Administrator.
Contact NVRH to notify us of your intent to make an IRA rollover gift. Oftentimes, when we receive these types of checks from an administrator, they do not identify the donor or the fact that it is a rollover gift. For your convenience, here is a sample letter that you can use to notify us.
Questions or Need Help?
If you have any questions about an IRA charitable rollover gift, please contact Emily Hutchison, Director of Philanthropy at 802-748-7476 or by email.
Additional IRA Charitable Rollover Information
IRA Charitable Rollover qualifications
- The IRA owner must be at least 70½ years old at the time a transfer is made
- The transfer must be made from the IRA directly to a qualified charity
- The combined value of all transfers cannot exceed $100,000 per taxpayer per taxable year
- A qualified charity is an organization described in section 170(b)(1)(A), other than organizations described in section 509(a)(3)
- Transfers are not included in adjusted gross income for federal income tax purposes
- Transfers may count as part of your annual mandatory IRA withdrawal amount
- IRA transfers are not taken into account in determining the deduction eligibility of other charitable contributions
Additional clarifications from the IRS
- Rollover distributions can satisfy pledges
- A person over 70½ who is the beneficiary of an inherited IRA may make charitable transfers from that IRA
- Charitable transfers may be made from a SEP or a SIMPLE IRA if no employer contributions were made to the IRA in the year of the transfer
- A qualified charitable distribution is not subject to withholding of income taxes
- The maximum total qualified charitable distribution amount each year is $100,000 per person, not per household, or per IRA account.
- The IRA administrator may issue a check payable to the charity and present it to the donor to deliver to the charity. The gift date is the date the donor mails the check via the USPS or hand-delivers it to the charity
- Transfers cannot be made from 401(k) plans, but it may be allowable under certain circumstances to move a portion of the 401(k) into a Rollover IRA and then make qualified distributions from there
- The transfer must be made from your IRA directly to charity, otherwise you must declare the distribution as income
- The IRA must be a traditional IRA or a Roth IRA; it cannot be an employer sponsored plan such as a SIMPLE IRA, a 401(k) or 403(b) plan or a simplified employment pension (SEP) plan
- Distributions from Roth IRAs are not taxed to the account owner, so it is still wise to determine if some asset other than the Roth IRA is best to give to charity
- Transfers are not deductible as charitable gifts
- You may receive no benefits from charity for your transfer (e.g. tickets, dinners, etc.)
- Transfers cannot be made to gift annuities, charitable trusts or pooled life income funds
- Transfers cannot be made to donor advised funds, private foundations or “supporting organizations”
- The donor is responsible for and must obtain documentation for the transfer as he/she would substantiate any gift to charity
- Transfers are made from otherwise taxable income first. Non-taxable income in your IRA may not be considered a qualified transfer and should be handled differently
- In some states (check with your advisor), IRA rollovers may be includable in income for state and local tax purposes and may not earn an offsetting charitable deduction, depending on state and local law
- In some states (check with your advisor), IRA withdrawals up to a certain amount may not be includable for state income tax purposes, thus negating some benefit of an IRA charitable rollover at the state level.
The FAQs on the SECURE Act
The Setting Every Community Up for Retirement Enhancement (SECURE) Act was enacted January 1, 2020. With it came many questions for those who are planning for retirement, retired or who are retiring in the near future.
Passed as part of a spending bill, the SECURE Act brought with it the most significant changes to retirement plans since the Pension Protection Act of 2006. While some changes impact you, others will impact the people you name as a beneficiary.
What Stayed the Same
If you are 70 1/2 or older, you can still make a tax-free gift to a qualified charitable organization. You can transfer any amount up to $100,000 per year directly to a qualified charitable organization without paying income tax on the distribution. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deduction. Your gift will also be put to use today, allowing you to see the difference you are making.
Changes to Know
You can contribute to your IRA longer. Previously, you could not contribute to your IRA after reaching the age of 70 1/2. However, more and more people are working past that age. The SECURE Act repeals the age limitation, allowing you more time to save.
The required miminum distribution (RMD) age changed. The SECURE Act changed the age at which you must start taking RMDs from your retirement account from 70 1/2 to 72 for those who were born July 1, 1949, or later. This change allows you additional time to grow the funds in your account before you have to start withdrawing from it.
IRA beneficiary rules have changed. Prior to the SECURE Act, beneficiaries could take distributions throughout their lives. This offered tax savings for the beneficiaries who are spouses, but repeals it for non-spousal IRA beneficiaries. They will now have 10 years to withdraw the entire amount.
Review Your Plans
If you have questions about the impact of the SECURE Act on your retirement plans, be sure to make an appointment with your financial advisor. They can review the plans you have in place (including your beneficiary designations) and help make sure you are still on the right track.