IRA Charitable Rollovers are a Win-Win-Win

by Andrew Dumont, Chair

Did you know you can support no-cost home repairs for low-income homeowners, lower your taxes, and meet your Individual Retirement Account’s (IRA) required minimum distribution? That’s what I call a win-win-win, and it is possible if you direct your IRA’s trustee to make a qualified charitable distribution to Rebuilding Together Arlington/Fairfax/Falls Church (RT-AFF).

As you may know, if you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 72. These distributions must equal at least a minimum amount, commonly referred to as the required minimum distribution.

What you may not know is that qualified charitable distributions (QCDs) count towards your required minimum distribution. A QCD is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions (like RT-AFF!). You must be at least age 70 1/2 when the distribution was made.

The maximum annual exclusion for QCD’s is $100,000. Any QCD in excess of the $100,000 exclusion limit is included in income like any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $100,000 from his or her income. The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income. It is important to note that you can’t also claim a charitable contribution deduction for any QCD that you have excluded from your income.

So, if you are the proud owner of an IRA, love RT-AFF’s mission, and want to support our work through a QCD, reach out to your tax advisor and IRA trustee today to find out if this is an opportunity you can take advantage of!

*Note: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transactions.