“IRA Rollover” Gifts (QCD)

The Protecting Americans from Tax Hikes (PATH) Act of 2015 made permanent the qualified charitable distribution (QCD) transfer provision, which is popularly known as the IRA charitable rollover. The Consolidated Appropriations Act of 2023 expanded the benefits of the charitable rollover.

How It Works

1. You are 70½ or older and instruct your IRA administrator to make a direct transfer to one or more charitable organizations.
2. The IRA administrator makes the transfer per your direction.

Benefits of the IRA charitable rollover:

• The gift is very simple to arrange.
• The amount transferred from an IRA to charity is not added to taxable income.
• The amount you transfer will count towards your mandatory distribution if you have attained the age when required distributions begin. That age, which had been 72, was raised to 73 for those who become 72 between January 1, 2023, and December 31, 2032, and 75 for those who reach 74 after December 31, 2032.
• The rollover gift can be outright (charity can use it now), or it can be for a life-income plan (pays income to the donor and/or spouse).
• You support the programs that are important to you.

Requirements and restrictions for making an IRA charitable rollover gift:

• The donor must be 70½ or older.
• The gift must be made directly from an IRA to an eligible charitable organization.
• An IRA transfer for an outright gift can be made year after year, and outright gifts to all charities combined cannot exceed $111,000 in 2026.
• An IRA transfer for a life-income plan can be made in only one tax year, selected by the donor, and the limit to all charities combined is $55,000 for 2026.
• Gifts cannot be made to a donor-advised fund, supporting organization, or private foundation.
• Because the gift is not included in taxable income, no charitable deduction is allowed.
• The gift can be made only from an IRA. Gifts from 401(k), 403(b), and 457 plans are not permitted, but it may be possible to roll funds from one of these plans to an IRA and then make the IRA gift.

An IRA rollover may be the right gift for you if:

• You want to make a gift, and your IRA constitutes the largest share of your available assets.
• You are required to take the minimum distribution from your IRA, but you do not need additional income.
• You do not itemize your deductions. In that case, a distribution to you personally increases your taxable income without the benefit of an offsetting deduction. An IRA charitable rollover will not be included in your taxable income even if you do not itemize deductions.
• You live in a state where retirement-plan distributions are taxable on your state income-tax return, but your state does not allow itemized charitable deductions.
• You would like to make a large gift, but all of it would not be deductible because of the annual limitation of 60% of adjusted gross income for charitable contributions. The IRA charitable rollover is equivalent to a deduction because it is not included in taxable income.
• You have an outstanding pledge to a charity. An IRA charitable rollover can satisfy a pledge without violating rules against self-dealing.

Here are the steps to make this gift:

• If you want to make a qualifying transfer, contact your IRA administrator and instruct that person to transfer funds to the charity(ies) you designate.
• Contact our office. We will answer your questions, provide instructions for completing your gift, and discuss the purpose for which you would like your gift to be used.