What Is an IRA Charitable Rollover?

An IRA charitable rollover — otherwise known as a qualified charitable distribution (QCD) — allows donors to transfer a tax-exempt philanthropic gift from their IRA account. Donations to IRS-qualified charitable organizations count toward your RMD.

Why Donate by an IRA Charitable Rollover?

There are several benefits of giving via qualified charitable distribution:

• Support Catholic World Mission while lowering taxable income: Your QCD gift may not be subject to taxation depending on whether your IRA is funded with post-tax dollars. If you contribute to a charity with funds excluded from taxable income, like your post-tax Individual Retirement Account, the gift can be excluded from taxable income as well. A lower taxable income could positively impact your tax deductions and credits on Social Security or Medicare.
• Your donation counts toward your required minimum distributions: U.S. tax law requires IRA holders over 70 1/2 to withdraw annually from their employer-sponsored retirement plans — these withdrawals are your required minimum distributions. Your IRA charitable rollover donation to Catholic World Mission counts toward your RMDs.
• Begin your giving legacy today: Once you’ve retired, your income may be limited — which deters many from philanthropic or giving goals. By donating through a QCD, you can begin your giving legacy today and count your IRA rollover donation as part of your required minimum distributions as well as a tax-free qualified charitable distribution.

How Does an IRA Charitable Rollover Work?

Beginning at 70 ½, donors can transfer funds directly from their IRA to Catholic World Mission to coincide with the start of their required minimum distributions — as long as they meet the eligibility requirements outlined below. Here’s how it works:

• The donor requests their IRA custodian to make a direct transfer of IRA funds to their preferred charitable 501(c)(3) organization.
• The IRA custodian — or administrator — transfers the funds directly from the donor’s IRA to the charitable organization of their choice.
• The donation counts as a qualified charitable distribution and is excluded from the donor’s adjusted gross income.

Are You Eligible to Donate by an IRA Charitable Rollover?

To determine if giving by an IRA charitable rollover is right for you, make sure:

• You or the donor are at least 70 ½ years old.
• You or the donor intend to give $100,000 or less.
• The gift is excluded from the donor’s taxable income.
• The contribution is transferred from an IRA to an eligible 501(c)(3) organization, not a donor-advised fund or private sponsoring organization.
• The donation is from an IRA, not a 401(k), 403(b) or another nonqualifying retirement account.