Individual Retirement Account (IRA) Contributions
A donation from an individual retirement account (IRA), also known as a qualified charitable distribution (QCD), can be a tax effective way to maximize the impact of your gift and your ability to change someone’s life.
CPA Board of Directors with Beth Hines, Executive Director
WAYS TO GIVE
LEARN ABOUT MAKING A CHARITABLE DONATION FROM AN IRA
What is a qualified charitable distribution?
A qualified charitable distribution (QCD) lets supporters 70½ years old or older transfer up to $108,000 annually from an individual retirement account to eligible nonprofits tax-free. Starting at age 73, IRA owners must take a required minimum distribution (RMD), an annual minimum amount that an account holder must withdraw. You can satisfy your RMD without increasing your taxable income by giving from your IRA Charitable Distribution.
FAQs
How do charitable distributions work and what qualifies as a charitable IRA rollover?
If you are over age 70½, you may give a gift from your IRA as a tax-free distribution to a qualified nonprofit. This means an amount (up to $108,000 annually) transferred from your IRA directly to a organization like CPA can count toward your IRA required minimum distribution (RMD) without being considered taxable income for you. The deduction can serve to lower your adjusted gross income (AGI). The distribution, also known as an IRA Charitable Rollover, is authorized by Section 408(d)(8) of the Internal Revenue Code.
As a qualified charitable IRA rollover, the gift must be transferred from a traditional IRA directly to a qualified public charity like CPA and must be completed during the applicable tax year.
Is donating from an IRA to a nonprofit tax deductible?
A qualified charitable distribution (QCD) to eligible nonprofits up to $108,000 avoid being subject to federal income taxes. You can make IRA-qualified charitable distributions from traditional IRAs, inactive Simplified Employee Pension (SEP) plans, and inactive Saving Incentive Match Plan for Employees (SIMPLE) IRA.
If you are age 70½ or above, you can make QCDs directly from your IRA to CPA. This distribution may be excluded from your federal taxable income and potentially provide other benefits.
You should consult a tax advisor or other professional for additional information regarding your specific situation.
Can an IRA donation to charity count toward my required minimum distribution (RMD)?
If you’re age 70½ or older and you need to take an RMD – the withdrawals you’re legally required to make – you may be eligible to have a qualified charitable distribution to CPA count toward your RMD up to $108,000. This is an opportunity to support CPA while also satisfying your RMD in the year of your gift.
You should consult a tax advisor or other professional for additional information regarding your specific situation.
How much of an IRA can I give to a nonprofit?
Eligible individuals can donate up to $108,000 from an IRA each year. This amount can be split between multiple nonprofits or donated to a single nonprofit.
Can a charity be the beneficiary of my IRA?
Yes, you can choose for Community Partners in Action to be the beneficiary and receive the benefits of your retirement account or IRA. Supporting a nonprofit organization like CPA with your IRA account is an excellent way to give back in a meaningful way.
Community Partners in Action does not provide tax, legal or accounting advice. This material is prepared and made available to you for informational purposes only and is not intended to provide or be relied upon for tax, legal or accounting advice. You should always consult a tax professional to determine your particular tax benefits that may result from
any particular type of gift to charity.