The IRA Charitable Rollover provides you with an excellent opportunity to make a gift during your lifetime from an asset that would be subject to multiple levels of taxation if it remained in your taxable estate.
Life Income Gift CAA 2023 allows for a one-time distribution to create a life-income gift, most commonly a charitable gift annuity (CGA), and charitable remainder unitrusts (CRT) or annuity trusts. This new type of QCD is a one-time maximum transfer of $53,000 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.
Jane wants to make a contribution to Wyndmoor College. She is 72 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 Wyndmoor. The $20,000 distributed to Wyndmoor will not be subject to federal tax and will be counted toward her annual minimum required distribution.
As you plan your required minimum distributions for this year, if you do not need the money the government is requiring you to take, consider using it for a charitable gift using the IRA Charitable Rollover.
See below for sample letters you can send to your plan provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can look for the check from your IRA administrator.
{Date}
{Name of IRA Provider}
{Address}
{City, State, Zip}
(Call your plan provider to determine the most efficient way to send this letter of instruction)
Re: Request for Qualified Charitable Distribution from Individual Retirement Account
Dear Sir or Madam:
Please accept this letter as my request to make a qualified charitable contribution from my Individual Retirement under Sec. 1201 of the Pension Protection Act of 2006 (the PPA) and Sec. 408(d)(8) of the Internal Revenue Code of 1986, and made permanent under the Consolidated Appropriations Act of 2016. My account Number is {Account Number}.
Please issue a check in the amount of $____________ payable to Wyndmoor College at the following address:
440 College Road
Wyndmoor, PA 19038
In your transmittal to Wyndmoor College, please state my name and address as the donor of record in connection with this transfer, and copy me on your transmittal. It is my intention to have this transfer qualify during the {Year} tax year. Therefore, it is imperative that this distribution be postmarked no later than December 31, {Year}.
If you have any questions or concerns regarding this request, I can be reached at {Phone Number} or {Email Address}.
Thank you for your prompt attention to and assistance with this matter.
Sincerely,
{SIGNATURE OF IRA OWNER}