The rules that allowed tax-free Qualified Charitable Distributions from IRAs to charity (often called IRA charitable rollovers) were made permanent by Congress in 2015. The final Qualified Charitable Distribution rules make it easier for donors to use this giving strategy to minimize the tax bite of the required minimum distribution obligations associated with IRAs.
A tax-free IRA-to-charity transfer is an important opportunity for donors who:
- Plan to make charitable donations
- Don't need the money they must withdraw as required minimum distributions (RMDs)
- Want to support our mission
Qualified Charitable Distribution Requirements
The tax benefits associated with Qualified Charitable Distributions from IRAs directly to charity are subject to precise and specific requirements:
- a minimum age—the donor must be at least 70½
- a maximum amount—no more than $100,000 per year
- a qualified public charity—no gifts to private foundations, or to set up donor-advised funds or split-interest charitable trusts
- a direct transfer—money must be moved directly from the IRA account to the charity
Satisfy Required Minimum Distributions
Qualified Charitable Distributions can be used to satisfy all or part of a donor’s required minimum distribution (up to $100,000). This makes them particularly attractive to donors who are still working, have sufficient retirement assets, or, in general, find themselves in a higher tax bracket.