Charitable IRA Rollover FAQsby David Troutman • November 2, 2018 Share:
If you are thinking about making a charitable gift using your traditional IRA, but are not quite sure if you are qualified to do so, or about how to execute the process, not to worry. We have compiled a list of frequently asked questions to help you along the process. If you do not find an answer which adequately addresses your concerns, please call the Office of Gift Planning at (877) 743-4545 and someone will be glad to speak with you.
WHAT IS THE MINIMUM AGE FOR MAKING A CHARITABLE IRA ROLLOVER GIFT?
You must turn 70-1/2 prior to completing the distribution.
IF I MAKE A CHARITABLE IRA ROLLOVER GIFT, DOES IT AFFECT MY REQUIRED MINIMUM DISTRIBUTION (RMD)?
The amount distributed to Wabash College will be deducted from your RMD.
I HAVE HEARD ABOUT "QUALIFIED CHARITABLE DISTRIBUTIONS" (QCD), IS THIS THE SAME THING AS A CHARITABLE IRA ROLLOVER?
Yes. A QCD is the language used in the tax code, but they are more often referred to as Charitable IRA Rollovers.
IS THERE A TAX DEDUCTION FOR MAKING A CHARITABLE IRA ROLLOVER?
IRA rollover gifts are not deductible–but the money is never included in your income in the first place, which for many people is more favorable than a deduction.
I HAVE A ROTH IRA, CAN I USE IT FOR A CHARITABLE IRA ROLLOVER?
Roth IRAs are eligible for rollover treatment; however, you may wish to discuss with your financial advisor whether this is the best way for you to give.
I DO NOT HAVE AN IRA, CAN I MAKE A CHARITABLE IRA ROLLOVER FROM ANOTHER RETIREMENT ACCOUNT?
No, transfers must come directly from an IRA or Roth IRA. However, if you have retirement assets in a 401(k), 403(b), etc., you may be able to roll those funds into an IRA, then use the IRA for charitable giving. Please discuss this with your financial advisor.
WHAT IS THE MINIMUM GIFT SIZE AND IS THERE A MAXIMUM GIFT SIZE?
The minimum gift size depends on the policies of your IRA custodian. The maximum distribution permitted by the IRS is $100,000, per account holder (i.e., per spouse), per year.
ARE THERE RESTRICTIONS OF THE CHARITABLE IRA ROLLOVER?
A rollover cannot be used to make gifts when the donor receives a benefit in return (i.e., to attend a dinner). Also, it is not permissible to use a rollover to fund life-income gifts such as gift annuities and charitable remainder trusts.
HOW DO I INITIATE A CHARITABLE IRA ROLLOVER?
You should start by contacting your IRA custodian. Only custodians of IRAs are permitted to make QCDs on behalf of their account holders – not account holders. If you have check writing privileges on your IRA, your IRA custodian must act on your behalf – checks must be written by your IRA custodian to Wabash College. If you receive a check from your custodian payable to Wabash College, the gift is considered complete when you place your check in the mail addressed to Wabash College.
WHEN SHOULD I INITIATE A REQUEST FOR A DISTRIBUTION TO COUNT TOWARD MY RMD FOR THE CALENDAR YEAR?
You may request a distribution at any time during the year. If you intend that your distribution count toward your RMD for the calendar year, please begin your transfer by early December to allow ample time for your transfer to be completed. In order for your QCD to qualify against your calendar year RMDs, the check must arrive at Wabash College and THEN be CASHED by the College on or before 11:59pm ET on December 31st of the year you are making the gift. Additionally, a transfer of the funds to Wabash after the check is deposited must take place – if this doesn’t happen before the end of the calendar year, the QCD is not counted until the next calendar year.
ARE THERE SPECIAL FORMS I NEED TO USE?
Your IRA custodian may have its own form to request the transfer; if not, please visit IRA Charitable Rollover Instructions to find a sample instruction letter for your custodian.
CAN MY IRA GIFT SATISFY A PLEDGE OR CREATE AN ENDOWED FUND?
Yes! Payment schedules of various lengths may be established by the donor with a maximum duration of five years.
WHAT TYPE OF ACKNOWLEDGMENT SHOULD I EXPECT?
We will send you a written acknowledgment of your gift to thank you and to confirm the amount of your gift and its intended purpose. Because there is no income tax deduction, you will not receive a conventional receipt.
HOW DO I KNOW IF A CHARITABLE IRA ROLLOVER IS RIGHT FOR ME?
If you are over age 70-1/2 and have an IRA, the rollover might be right for you if:
- You do not itemize deductions
- You don’t need your required minimum distribution (RMD)
- Your RMD causes more of your Social Security income to be taxed
- You are making charitable contributions at your deduction limit, but want to do more
I HAVE MORE QUESTIONS, WHOM SHOULD I CONTACT?
Please call the Office of Gift Planning at 877-743-4545 or e-mail us at firstname.lastname@example.org. Thank you for your consideration of a gift to Wabash College!