IRA Charitable Rollover / Qualified Charitable Distribution

IRA Charitable Rollover

The IRA Charitable Rollover provides you with an excellent opportunity to give 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

• You must be age 70 ½ or older at the time of gift.
• Transfers must be made directly from a traditional IRA account by your IRA administrator to Moravian. Funds that are withdrawn by you and then contributed do NOT qualify. Gifts from 401k, 403b, SEP and other plans do not qualify.
• Gifts must be outright. Distributions to donor advised funds or life-income arrangements such as Charitable Remainder Trusts (CRT) and charitable gift annuities (CGA) or to obtain other benefits such as tickets to athletics events, do not qualify.

Benefits of Qualified Charitable Distributions

• Can total up to $108,000.
• Are not included in your gross income for federal income tax purposes on your IRS Form 1040 (no charitable deduction is available, however).
• Count towards your required minimum distribution, if you have one.

Life Income Gift CAA 2023 allows for a one-time distribution to create a life-income gift, most commonly a CGA and charitable remainder unitrusts or annuity trusts. This new type of Qualified Charitable Distribution (QCD) is a one-time maximum transfer of $54,000 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 Moravian University. 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 Moravian. The $20,000 distributed to Moravian 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.