QUALIFIED CHARITABLE DISTRIBUTIONS FROM RETIREMENT ACCOUNTS
Beginning at age 70 ½, people with a tax deferred Individual Retirement Account (IRA, 401k, 403b, 457 plans, etc.) are required to withdraw a minimum amount from their account each year. This is known as the Required Minimum Distribution (RMD). The RMD is taxed as income. People who do not need the income or who wish to reduce their tax liability can meet the RMD by transferring the amount of RMD funds from their IRA to a charity/church annually. This way of giving is called a Qualified Charitable Distribution. Qualified Charitable Distributions gifts must meet the following requirements:
- Donors must be age 70 ½ or older
- Funds must come from a tax deferred retirement account, i.e. traditional IRA, 401k, 403b, 457 plans. Roth IRA’s are not eligible.
- Your gift must go directly to the charity. You cannot receive the cash first.
- The maximum contribution is $100,000.
- The Qualified Charitable Distribution can be activated year around and can be deactivated by the donor if circumstances change.
HOW TO DO THIS?
Discuss this option with your family. Your tax preparer can best explain the advantages/disadvantages in your personal tax situation. If you decide to proceed, contact your Retirement Plan Administrator whose contact information is on your regular financial statements for your retirement account and request necessary forms for a Qualified Charitable Distribution from your IRA. Complete the required forms, listing the FUMC EVERLIVING CHURCH TRUST as the recipient. Obtain the FUMC Tax ID Number from the FUMC Business Manager to use in lieu of Social Security number plus any FUMC banking information required. Make a copy of the Request for a Qualified Charitable Distribution Form for the donor’s files, mail a copy to the FUMC Business Manager, and return the original signed form to the Retirement Fund Administrator following their directions. The Retirement Fund Administrator will process the transfer for you. The Qualified Charitable Distribution will be mailed to FUMC or direct deposited into FUMC’s bank account.
Note: A similar option for persons over 70 ½ years of age, is a Charitable IRA Rollover. The donor surrenders ownership of all or a part of a retirement account (Traditional IRA or Roth IRA) to the FUMC EVERLIVING CHURCH TRUST. This transfer is “rolled over” from the Retirement Fund Administrator directly to the FUMC EVERLIVING CHURCH TRUST without going to the donor and being considered taxable income to the donor. The steps would be like the Qualified Charitable Distribution above.