IRA Rollover (Qualified Charitable Distribution)
The Protecting Americans from Tax Hikes Act (PATH), made extensions permanent for the future. Can you benefit?
This provision gives individuals 70½ and older the option to give to charities like Jesus Film Project and Campus Crusade for Christ (Cru) directly from their traditional IRA up to $100,000 without the normal tax consequences on withdrawals. An IRA Qualified Charitable Distribution (QCD) or Rollover gift meets the minimum distribution requirements and many people can benefit. For those whose charitable giving exceeds their annual adjusted gross income limits, a gift of this kind is especially helpful.
Consult your tax advisor. Gifts must have been transferred by December 31 of the tax year to which they are being applied. For assistance, call toll free at 1-888-278-7233, option #1, then option #2, and ask for Debbie Williams or Anna Pratt. Or you can click here to contact them online.
To send your IRA Qualified Charitable Distribution (QCD) (or Rollover) gift today, please use the printable form found at the link below. This form provides you and your IRA custodian all the specific information needed to complete the gift transfer and to help bring more unreached people the “gospel on film.”
An additional benefit from IRA Rollover gifts: potentially lower your future Medicare premium increases.
The IRA Rollover gift, also known as the Qualified Charitable Distribution (QCD), may help a person minimize income. And, for older Americans what this could mean is that QCD gifts may help minimize the impact of an IRA on your Medicare costs. How you ask? Because of the increased standard deduction amounts in the 2018 tax laws, many people won’t be deducting contributions, so QCDs are more valuable for income tax planning.
Here’s a simple example of how this might work.
Linda decided to do qualified a charitable distribution of $5,000 to satisfy her required minimum distribution (RMD) in 2018. The $5,000 is not included in her 2018 modified adjusted gross income (MAGI) used to determine her Medicare cost for the year 2020. Linda’s QCD will save her $1,212 in Medicare costs for 2020. If Linda had instead taken her RMD and made a charitable cash donation of $5,000, that would not have lowered her Medicare cost.
When a person begins to use the QCDs to satisfy RMDs, he or she can start seeing the benefits two years later. So, depending on one’s income levels, he or she may benefit in some years but not others, but this strategy is worth looking into on an annual basis.
For the individual who is charitably-minded and going to make donations any way why not go ahead and make a QCD and save hundreds or even thousands in Medicare costs, as well as save income taxes. If you are 70½ or older and hold an IRA that you must draw from (not a Roth IRA), this could work for you. Always consult with your tax advisor.