The IRA Charitable Rollover 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
Benefits—qualified charitable distributions
Life Income Gift CAA 2023 allows for a one-time distribution to create a life-income gift, most commonly a charitable gift annuity (CGA), and charitable remainder unitrusts (CRT) or annuity trusts. 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 Catholic Central 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 Catholic Central. The $20,000 distributed to Catholic Central 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.
See below for a sample letter you can send to your plan provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can look for the check from your IRA administrator.
{Date}
{Name of IRA Provider}
{Address}
{City, State, Zip}
(Call your plan provider to determine the most efficient way to send this letter of instruction)
Re: Request for Qualified Charitable Distribution from Individual Retirement Account
Dear Sir or Madam:
Please accept this letter as my request to make a qualified charitable contribution from my Individual Retirement under Sec. 1201 of the Pension Protection Act of 2006 (the PPA) and Sec. 408(d)(8) of the Internal Revenue Code of 1986, and made permanent under the Consolidated Appropriations Act of 2016. My account Number is {Account Number}.
Please issue a check in the amount of $____________ payable to {name of appropriate affiliated foundation} at the following address:
Catholic Central School
1200 E High Street
Springfield, OH 45505
In your transmittal, please state my name and address as the donor of record in connection with this transfer, and copy me on your transmittal. It is my intention to have this transfer qualify during the {Year} tax year. Therefore, it is imperative that this distribution be postmarked no later than December 31, {Year}.
If you have any questions or concerns regarding this request, I can be reached at {Phone Number} or {Email Address}.
Thank you for your prompt attention to and assistance with this matter.
Sincerely,
{SIGNATURE OF IRA OWNER}
© Planned Giving Marketing. This document is informational and educational in nature. It is not offering professional tax, legal, or accounting advice. For specific advice about the effect of any planning concept on your tax or financial situation or with your estate, please consult a qualified professional advisor.