IRA Charitable Rollover
How It Works
Mary, 72, has $500,000 in an IRA. She doesn't need all of her RMD (Required Minimum Distribution) for this year, and doesn't want to pay tax on that entire amount. Mary has also been considering a significant gift to the Music Center. She authorizes her IRA administrator to make a transfer of $10,000 to BMC, and the balance to herself.* The $10,000 counts towards her RMD for the year, and she does not pay tax on that amount.
*Charitable distributions are not eligible for a charitable deduction, as they are exempt from income tax.
- Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½ birthday to make the transfer).
How much can I transfer?
From what accounts can I make transfers?
- Transfers must come from your IRAs directly to the charity. If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to the charity.
To what charities can I make gifts?
- Tax exempt organizations that are classified as 501(c)(3) charities, to which deductible contributions can be made.
What are the tax implications to me?
- Federal – The transfer to the charity is not recognized as income, provided it goes directly from the IRA provider to us.
- State – Each state has different laws, so you will need to consult with your own advisors.
Does this transfer qualify as my minimum required distribution?
- Yes, once you reach age 70½, you are required to take minimum distributions from your retirement plans each year, according to a federal formula. IRA charitable rollovers count towards your minimum required distributions for the year.
What else should I know?
- Gifts must be outright and the donor cannot receive any goods or services in exchange for their contribution.
- Brevard Music Center is a 501(c)(3) charitable organization; our tax ID # (EIN) is: 56-0729350
Questions or need additional information? Please contact Aimee Smallwood in BMC's Development Office at 828-862-2148 or firstname.lastname@example.org.
This information is not intended as investment or tax advice. Please contact your tax adviser to see how giving directly from your IRA can benefit you.