Make an IRA Qualified Charitable Distribution
Note: Please consult with your tax advisor for specific details. This information is based on USA tax laws and is provided for information only. Please consult your local tax advisor or lawyer regarding charitable distributions for your jurisdiction.
Help with a tax-smart donation from your IRA
Are you 70 1/2 or older and not using your Required Minimum Distribution (RMD) for your living expenses? You can reduce your taxable income by using your RMD to make an IRA Qualified Charitable Distribution to an eligible charity like the Minor Use Foundation, Inc. (MUF).
The Basics
Since an IRA is a tax-deferred retirement account, contributions within stated limits are tax deductible, and appreciation and earnings are not taxed until they are withdrawn. When IRA owners reach age 70½, they are required to take yearly minimum distributions —even if they don’t want or need the income. IRA distributions are taxed as ordinary income, which could mean unfavorable tax implications depending on your financial circumstances. A one-step solution could be to request an IRA Qualified Charitable Distribution to a favorite charity, because IRA Qualified Charitable Distributions are not taxable as income. The important part to remember is that the distribution must pass directly to the recipient charitable organization.
How an IRA Qualified Charitable Distribution Works
- Direct a transfer from your IRA account to the Minor Use Foundation, Inc. (or other eligible charity).
- Exclude the gift amount from your income for federal tax purposes.
- Count the gift toward your Required Minimum Distribution for the year.
- Make a positive impact for specialty crop growers.
(Note: maximum distribution allowance is $100,000 per year.)
Example:
If you have turned 70 ½ and will be taking $1,000 out of your IRA this year, you might pay an additional $350 in income taxes (if your income tax bracket is 35%), leaving you with about $650 in total.
Instead you can direct the entire distribution to the Minor Use Foundation, and the full $1,000 will go directly to help fund research on plant protection technology.
This distribution will not affect your taxes.
Ready to Notify your IRA Administrator?
It’s easy when you use this sample distribution request letter. Just copy the text below and fill in the blanks.
[Your Name]
[Your Address]
[Date]
[Name of IRA administrator]
[IRA Administrator Address]
RE: Request for a Qualified Charitable Distribution or Charitable Rollover from IRA
Dear IRA administrator:
Please accept this letter as my request to make a qualified charitable distribution, also known as a charitable rollover from my Individual Retirement Account #[ ______________________] as provided in The Protecting Americans from Tax Hikes Act of 2015 and Section 408(d)(8) of the Internal Revenue Code of 1986, as amended.
Please issue a check in the amount of $[___________] payable to the Minor Use Foundation and mail it to:
Minor Use Foundation
1250 Revolution Mill Dr., Suite 228
Greensboro, NC 27405 USA
In your transmittal, please include my name and address as the donor of record in connection with the distribution and copy me.
It is my intention that this distribution qualify for exclusion from my taxable income during the [insert tax year] tax year.
If you have any questions or need to contact me, I can be reached at [insert contact information].
Thank you.
[Your Name and Email]
Please alert us about your gift via a qualified charitable distribution, as checks may arrive without identifiable information. Please email [email protected] and include your mailing address so we may acknowledge your donation.