By Carrie Stanley | December 19, 2019

Make a Charitable Impact with Your IRA

How You Can Donate Pre-tax Dollars to Your Favorite Charity

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Are you looking for a way to help Quechua Benefit? You or someone you know may be eligible to make a qualified charitable distribution from an IRA.

This information is especially beneficial for people who are over 70.5 years old. When you reach 70.5 years old you must start taking Required Minimum Distributions from your IRA account. Most people who are age 70.5 are already drawing funds in retirement anyway, so they meet this requirement. But other people who don’t necessarily need the money are forced to take a certain percentage at this time. This is how the IRS makes you pay taxes on all that tax-deferred money you earned over your lifetime.

To put it very simply, this means that you can donate to any qualified 501c3 directly from your IRA and bypass paying taxes on that money. Yes, that’s right. You could give to your church or other local nonprofit and actually save money on taxes each year!

Here is an example:

Let’s say you are above age 70.5 and normally give $3,000 to a charity you love and tithe another $3,000 to your church. Instead of you writing them a check from your personal bank account, you have your IRA broker cut you a check from your IRA that’s written directly to each organization.

If you withdrew the same $6,000 from your IRA and made the donation, then you would pay taxes on that money.

If your taxes were 30% federal and 5% state, the total tax saving is $2,100 for your $6,000 donation!

You receive several benefits:

  1. The charitable contribution counts toward your required minimum distribution each year.
  2. Normally a withdrawal from your IRA would count as income, which could cause you to pay taxes on your Social Security and would count towards raising your Medicare premiums. You avoid this tax by simply having your plan administrator cut the check directly from your IRA.
  3. You also don’t need to worry about the adjusted gross income limitations for charitable donations each year.

Qualifying Requirements:

  1. You can’t give to a private (grant-making) foundation
  2. As stated above, you must be 70.5 years old.
  3. The charitable organization must give you proof of the contribution.
  4. These contributions must come from a traditional IRA.
  5. You are limited to $100,000 per year in contributions like this. But,
  6. The tax benefit is per person; so if you have a spouse with a traditional IRA you could potentially gift up to $200,000 between the two of you.

Would you like help with doing this for yourself or a family member?

Quechua Benefit is glad to help!

Contact Mike Safley (503) 703-6020 or Dale Cantwell (303) 902-4503 for more information.

 Click here to read more about the benefits of QCD(s) and the rules that govern them. Your financial advisor can help you make your Qualified Charitable Distribution to Quechua Benefit. 100% of your donations directly impact the lives of families, women, and children in Peru.

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