The IRA Gift (QCD)
NEW LAW: No Required Minimum Distributions in 2020!
As a part of the CARES Act, Congress has temporarily eliminated most required minimum distributions (“RMD”) from retirement plans during 2020. Check with your financial advisor to see how this might affect you. Even without an RMD, a QCD remains a great way to make tax advantageous contributions. Learn more about the CARES Act.
Here is a tax-smart way to make an impact to Salesian Missions using your traditional or Roth IRA. The IRA charitable rollover (also called the Qualified Charitable Distribution, or QCD) is a great way to make a tax-free gift to Salesian Missions and satisfy your Required Minimum Distribution (RMD). If you are not required to take an RMD but no longer itemize your deductions, then a QCD may be right for you as well.
How Do I Qualify?
The IRA charitable rollover (QCD) offers multiple benefits for making gifts from your traditional or Roth IRA.
- You must be 70 ½ years or older at the time of the gift.
- Gifts must go directly from your IRA to Salesian Missions.
- Gifts must come from a traditional IRA or Roth IRA account.
- Gifts cannot exceed $100,000 per donor per year.
Benefits of an IRA Charitable Rollover Gift
- If you don’t itemize deductions and are not yet required to take your RMD, a QCD offers all of the benefits of an itemized income tax charitable deduction
- If you are age 72 or older and must take your RMD, a QCD can satisfy your RMD without increasing your income taxes.
- You may direct your gift to a program or area of your choice.
- It is a wonderful way to create an immediate impact on Salesian Missions.
Q: Can I still to use my IRA to support Salesian Missions?
A: Yes, there are two ways to do this and both have significant tax advantages.
If you are age 70½ or older, you can direct your IRA administrator to make a “qualified charitable distribution” to Salesian Missions. You will make a meaningful gift to Salesian Missions, pay no income tax on the withdrawal and it will count toward your required minimum distribution.
You can also include gift from your IRA at the time of your death completely avoiding the income tax that your heirs would have paid if you had left your account to them.
Q: How old do I have to be to save money in an IRA?
A: New rules allow you to make contributions to your traditional IRA at any age, as long you are still working.
Q: When do I have to start taking money out of my IRA?
A: The age at which you must begin taking required minimum distributions (RMD) from your IRA has been increased to age 72. You must begin taking your required distributions by April 1 of the year following your 72nd birthday. You will have to pay income tax on these required distributions.
Q: Can I leave my IRA to my spouse or others?
A: Yes, but they will pay income tax when they withdraw the money. And non-spouse beneficiaries will be required to withdraw the money - and pay income tax - within 10 years of your death. (The old law allowed your beneficiaries to postpone the income tax by “stretching” those distributions over their lifetimes)
Q: Are there other changes affecting my charitable giving?
A: Yes. Even if you do not itemize your income tax deductions, a special rule for 2020 only allows you to reduce your taxable income by up to $300 for cash contributions to Salesian Missions. If you do itemize, another special rule allows you to deduct up to 100% of your adjusted gross income for cash contributions made in 2020.