IRA Charitable Distribution

As of January 1, 2020, the IRA Charitable Distribution was signed into permanent law, allowing taxpayers age 72 or older to transfer up to $100,000 annually from their IRA accounts directly to charity.

What is the IRA Charitable Distribution and What Are the Benefits?

The IRA charitable rollover allows individuals age 72 and older to make direct transfers of up to $100,000 per year to qualified public charities, like the Southeast Virginia Community Foundation. The individuals do not have to count the transfers as income for federal income tax purposes and transfers can satisfy your required minimum distribution (RMD), up to $100,000.

Who Should Consider an IRA Charitable Distribution?

  • Individuals age 72 and older who have more money in their IRA then needed for daily living expense and long-term care.
  • Spouses who both have IRA accounts and don’t need the income to support daily living expenses. Each spouse can transfer up to $100,000 from their IRA.
  • Generous donors who may give more to charity then they can deduct in a tax year because transfers from an IRA directly to a qualified charity are exempt from federal income taxes.
  • Donors who regularly give a portion of their income to charity and do not itemize deductions.
  • Individuals whose income from their required minimum distribution (RMD) will adversely affect the amount of Social Security income that is taxable.
  • Those who wish to remove up to $100,000 from their taxable estate, knowing that for people who have accumulated a significant net worth, the IRS can impose hefty taxes on IRA funds not distributed during their lifetime.

At SEVACF, your gift can establish or add to a Charitable Fund: a Designated Fund for specific organizations, a Scholarship Fund, a Field of Interest Fund, or our Community Needs Fund. While Donor Advised Funds, supporting organizations and private foundations do not qualify for these distributions, SEVACF can work with you to address your charitable interests in another way.

You’ll Benefit Most If You:

  • Are eager to make charitable gifts or build a legacy
  • Take only the required minimum distributions from your IRA
  • Are subject to charitable deduction limitations
  • Do not itemize your taxes, as gifting your IRA distributions gives you the equivalent of a tax deduction by not counting towards your taxable income
  • Are charitably inclined, do not need the extra income from your RMD, wish to reduce your tax liability and want to make a meaningful impact on your community

How an IRA Charitable Distribution Gift Works:

  • 1Contact us to alert us of your intention and to determine how you would like your gift to be used.
  • 2Contact your IRA plan administrator to make a gift directly from your IRA to SEVACF. You do no need to have any taxes withheld when the distribution is made directly to us. A check payable to the IRA owner that is merely endorsed over to a charitable organization does not satisfy the charitable distribution requirements.
  • 3Your IRA funds can be used to establish or add to a charitable fund (with the exception of donor advised) to help your favorite causes and charities.
  • 4Please note that IRA charitable rollover gifts do not qualify for a charitable deduction, as you have already received the benefit of not having to claim the distribution as taxable income.