November 4, 2019

Changes outlined in the 2018 Tax Cuts and Jobs Act mean it’s less likely that you will itemize your deductions, instead opting to claim the higher standard deduction. Enter the qualified charitable distribution (QCD), also called a charitable IRA rollover. A QCD allows you to benefit from your charitable donations even if you are not itemizing.

Using a QCD is a tax-savvy strategy that allows you to transfer up to $100,000 per year from your IRA directly to a qualified charity. It is only available to IRAs and for individuals who have reached required minimum distribution (RMD) age (73). Any amount processed as a QCD counts towards your RMD requirement and reduces the taxable amount of your IRA distribution. This lowers both your adjusted gross income and taxable income, resulting in a lower overall tax liability.

Frequently Asked Questions

What is a charitable IRA rollover?

The charitable IRA, or qualified charitable distribution, is a special provision allowing donors age 70.5 or older to transfer assets from their IRA directly to a public charity – like the Texas A&M Foundation. This distribution gift is excluded from taxable income and counts toward a donor’s required minimum distribution (RMD). Many donors have used this popular giving option to support Texas A&M with gifts ranging from $100 to $100,000.

How do I make a charitable IRA rollover gift?

Contact your IRA administrator and request to have the gift amount distributed directly from your IRA to the Texas A&M Foundation and/or other charities of your choice. If you have check writing privileges on your IRA account, this may be the most efficient way to make your gift directly from your IRA. Remember, when making a charitable IRA rollover gift you should not withdraw the funds yourself prior to making the gift; otherwise it will be taxed as income.

Is there a limit on the amount that can be given?

Yes, there is a limit. An individual taxpayer’s total charitable IRA rollover gifts cannot exceed $100,000 per tax year.

What about my required minimum distribution?

If you have not already taken your required minimum distribution in a given year, a qualifying rollover gift can count toward satisfying this requirement. If you are set up to automatically receive your RMD each year, you may want to turn off the payment and instead request two distributions: the QCD and any remaining RMD amount. For example, if an individual is automatically set to receive a $25,000 RMD, they could stop the automatic distribution and request two distributions: a $10,000 distribution directly to Texas A&M Foundation, and a $15,000 regular distribution. Together, these will have satisfied the RMD requirement for the year.

Can a rollover gift be used to fund a charitable remainder trust or charitable gift annuity?

No. A donor can receive no benefits in return for the gift.

Is a charitable IRA rollover right for everyone?

While this is a great option, other types of gifts may be more advantageous for certain situations. As with any gift planning question, donors should consult their professionals for specific advice.

Can I still make a gift with an IRA beneficiary designation?

Of course! Whether or not you choose to make a charitable IRA rollover gift, you can still designate the Texas A&M Foundation as a beneficiary to receive IRA assets after your lifetime. The lifetime charitable IRA rollover is simply another option for donors who would like to see their philanthropy at work now.

To learn more about how you can use your QCD to mutually benefit you and your Texas A&M passions, please contact Kevin Westerman '11 by completing the form below.