Are your required minimum IRA withdrawals greater than you need, or care to receive? Would you like to reduce the taxable income from your IRA?
The IRA charitable rollover, also known as a Qualified Charitable Distribution (QCD), is a terrific way to make a tax-free gift to the Northern Illinois University Foundation (the NIU Foundation). Your gift from your IRA, of up to $100,000, can satisfy your Required Minimum Distribution (RMD) without increasing your income taxes. Although you don’t get an income tax charitable deduction for the gift, you don’t pay taxes on your IRA withdrawal. In effect, the IRA charitable rollover is a tax-reducing and tax-free way to make a gift.
If you are 70½ or older you can tell your IRA administrator to transfer your gift directly from your traditional IRA or Roth IRA account to the NIU Foundation.
Consider these important requirements to make an IRA charitable rollover:
- You must be age 70½ or older when the gift is made.
- The gift must come from a traditional IRA or Roth IRA account. 401(k), 403(b), SEP IRA accounts, and other retirement accounts do not qualify.
- The gift must come directly from your IRA administrator to the NIU Foundation.
- Total IRA charitable rollover gifts in any one year cannot exceed $100,000.
- The IRA rollover gift can count toward your RMD if you have not already taken your RMD for the year you make your gift.
- The gift from your IRA will not be available as an income tax charitable deduction and will be excluded from your income.
Your IRA administrator can help you make a qualified charitable distribution from your IRA. Be aware that many administrators require you to use their QCD distribution form and comply with other requirements. Please note that it is important to follow your financial institution’s forms and procedures to ensure you receive the tax benefits of a QCD.
