Contributing with an IRA Charitable Transfer

The IRA Charitable Transfer is an excellent way to make gifts and receive tax benefits in return. As you plan your required minimum distributions for this year, consider using your IRA account to make the most of your charitable giving. You receive a tax benefit even if you take the standard deduction. It’s important to consider your tax situation before deciding whether to make a charitable contribution from your IRA, so be sure to share this gift plan with your financial advisor.

To qualify, you must be age 70½ or older at the time of gift.  Transfers must be made directly from a traditional IRA account by your IRA administrator to the Salisbury Forum. Gifts must be outright. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.

In terms of tax benefits, you can donate up to $100,000 annually. IRA Charitable Transfers are excluded gross income for federal income tax purposes on your IRS Form 1040. You receive no charitable deduction, and they count towards your required minimum distribution for the year in which you made the gift.

For example, John is 71 and wants to make a contribution to the Salisbury Forum. He has $200,000 in his IRA and he wants the contribution to be $2,000. He can authorize the administrator of his IRA to transfer $2,000 to the Salisbury Forum. Because the IRA Charitable Transfer is excluded from income, John will not be eligible for a charitable income tax deduction, but he still receives tax savings. The $2,000 distributed to the Salisbury Forum will be counted toward his annual minimum required distribution and he will not pay income tax on the portion given to charity.