IRA charitable rollover

The IRA Charitable Rollover (also known as a qualified charitable distribution or QCD) provides you with an excellent opportunity to make a gift during your lifetime from an asset that would be subject to multiple levels of taxation if it remained in your taxable estate.

To qualify

  • You must be age 70 ½ or older at the time of gift.
  • Transfers must be made directly from a traditional IRA account by your IRA administrator to Berkshire. Funds that are withdrawn by you and then donated to Berkshire do NOT qualify, nor do gifts from 401k, 403b, SEP and other plan.
  • Gifts must be outright. Distributions to Donor Advised Funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities or to obtain other benefits such as tickets to athletics events, do not qualify.

Benefits—qualified charitable distributions

  • The amount of the QCD is not included in your gross income for federal income tax purposes on your IRS Form 1040. However, no charitable deduction is available.
  • The amount of the QCD counts toward your RMD.
  • Donors can transfer up to $105,000 per year.

Life Income Gift: The Consolidated Appropriations Act of 2023 allows for a one-time distribution to create a life-income gift, most commonly a charitable gift annuity (CGA) or a charitable remainder trust (CRT). This new type of QCD is a one-time maximum transfer of $53,000 to a qualified CRT, or in exchange with a charity for a CGA. *Important terms and conditions apply. Please contact our office or your financial advisor.

This type of gift will reduce the value of your IRA, therefore reducing your future RMDs (as they will be based on the lower value). Also, a CGA provides a constant guaranteed lifetime stream of revenue. Using a distribution from your IRA to create an annuity is a savvy way to diversify your holdings and lock in a great return.

As always, we recommend that you consult a qualified advisor before making a new gift commitment.

Example

Jane wants to contribute to Berkshire School. She is 73* and is required to take a minimum distribution of $20,000 from her IRA but does not need the income. She can authorize the administrator of her IRA to transfer $20,000 to Berkshire. The $20,000 distributed to Berkshire will not be subject to federal tax and will be counted toward her annual minimum required distribution.

*Note that under the Secure Act 2.0, the age at which you are required to make minimum distributions (RMD) was raised to age 73 for individuals born between 1951 and 1959, and age 75 for those born in 1960 or later.