Donating an IRA or other retirement assets to charity can be a tax-smart estate planning strategy.
For taxpayers age 70½ or older, a Qualified Charitable Distribution (QCD) allows you to gift directly from your IRA up to $100,000 per year to qualifying charities. QCDs are tax-free distributions and count toward satisfying your required minimum distribution (RMD). No deduction is allowed since the distribution is not taxable. This strategy is beneficial if the taxpayer will not itemize their deductions in the current year. It could also help taxpayers control their adjusted gross income (AGI) which is used to determine many tax-related limitations.
Note: The amount of the QCD you are able to exclude from your income is reduced by any deductible IRA contributions you make in the year you reach age 70½ or after.
Why Consider Making a Qualified Charitable Distribution?
-Your donation will be put to use today, allowing you to see the impact of your gift.
-Beginning in the year you turn 72, your gift can be used to satisfy all or part of your required minimum distribution (RMD).
-You pay no income taxes on the gift. You benefit even if you do not itemize your deductions because the transfer generates neither taxable income nor a tax deduction.
-Since the gift doesn’t count as income, it can reduce your annual income level.
How Do You Make a Qualified Charitable Distribution?
Seek the advice of your financial or legal advisor.
Request that your advisor/broker selects Qualified Charitable Distribution when processing an IRA distribution. It is a standard option on IRA withdrawal forms.
Fredericksburg Symphony Orchestra
P.O. Box 1460
Fredericksburg, VA 22402
Federal Tax ID# 37-2006304.