Qualified Charitable Distribution

IRA Charitable Rollover; Qualified Charitable Distribution

Back on December 18, 2015, the IRA Charitable Rollover, or Qualified Charitable Distribution, was passed by Congress and signed into permanent law by the President.

What is a Qualified Charitable Distribution?

The IRA Charitable Rollover allows individuals age 70½ and older to make direct transfers totaling up to $100,000 per year to 501(c)(3) charities, like The Shoreline Church, without having to count the distributions as income for federal income tax purposes.

  • Who qualifies? Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½th birthday to make the transfer).
  • How much can I transfer? $100,000 each year.
  • Can my spouse also make an IRA Charitable Transfer? Yes, every individual who is the owner of a traditional IRA account can use the IRA Charitable Transfer for up to $100,000 each year.
  • From what accounts can I make transfers? Transfers must come from your IRAs directly to The Shoreline Church. If you have retirement assets in another type of retirement plan (i.e. a 401(k), 403(b), etc.), you must first roll those funds into an IRA, and then you can direct your IRA provider to transfer the funds from the IRA directly to The Shoreline Church.
  • To what charities can I make gifts? Tax exempt organizations that are classified as 501(c)(3) charities, including The Shoreline Church, to which deductible contributions can be made.
  • How will The Shoreline Church count the gift? We will give you full credit for the entire gift amount once it is transferred.
  • What are the tax implications to me?
    • Federal – The transfer to The Shoreline Church 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. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still other states have no income tax at all.
  • 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 is the procedure to execute an IRA charitable rollover? Time is limited, so contact your IRA plan provider to learn their procedures. We also offer a sample letter (which you can download here) that you can send to your plan provider to initiate a rollover. Just contact us at the number below when you direct the rollover so we can look for the check from your plan provider.

Important: Be sure to check with your financial advisor to determine whether this gift plan is right for you. This information is not meant as tax or legal advice.

SAMPLE QUALIFIED DISTRIBUTION LETTER

Call Judi at 949-369-7283, or e-mail her at judi@theshoreline.org for more information.