IRA Charitable Rollover

For individuals age 70 ½ and older, who are charitably inclined, using a “charitable rollover” for your IRA required minimum distributions (RMD) can be a tax-efficient way to support BBBS. The IRA owner can avoid the annual income tax on these withdrawals by transferring directly to BBBS instead.

What are the benefits TO YOU?

• Save income tax on your RMD
• Can be applied toward your annual Required Minimum Distribution (RMD)
• Beneficial for individuals who do not itemize deductions on their income tax
• Support the life changing work of BBBS without writing a check!

How to Make a Qualified Charitable Distribution (QCD)

To complete a qualified charitable distribution (QCD) from an IRA to a charity, the IRA owner must:

    1      Already be age 70 ½ on the date of your RMD.

    2      Ask your IRA administrator for the proper form and procedure to make a transfer from the IRA directly to Big Brothers Big Sisters of Greater Birmingham.

    3      Ensure that no tax withholding is being done from the QCD to BBBS (as the money must actually go to BBBS to qualify, and as a non-taxable distribution no withholding should be necessary)

    4      Ask your administrator to make the check payable directly to BBBS, (for you to avoid the income tax) and mail to us, or mail this same check to you to be forwarded along to us.

    5      There is no charitable income tax deduction for making this type of gift.

While the process of completing a QCD to a charity is fairly simple, the key requirement is that the distribution check must be made payable directly to the charitable entity. If the funds go to the IRA owner and are then passed along to the charity, it would be considered a taxable distribution to the IRA owner.

It won’t qualify if the trustee or custodian makes the mistake of putting IRA money in a non-IRA account of yours as an intermediate step. It won’t qualify if the check is made out to you.

QCDs may be made from any IRA or individual retirement annuity, but not from a simplified employee pension, a simple retirement account or an inherited IRA.

*This information is meant to summarize concepts and for general educational purposes only. Always consult your tax advisor for information specific to your own circumstances.                                                                                                                                            

IRA or Retirement Plan Simple Beneficiary change

This is fast becoming one of the most popular assets to use to make charitable gifts after lifetime. It is revocable so if your circumstances change later, and you need to change your mind, you may. It does not require legal fees to be completed.

It’s as easy as completing the paperwork from your retirement plan administrator, naming Big Brothers Big Sisters of Greater Birmingham as a partial beneficiary.

When an individual inherits an IRA or other qualified retirement plans, the value can be reduced by their income tax due; but in the hands of charity, is worth 100% of its value. When individuals inherit "qualified" retirement plans (those which you did not pay income tax on during lifetime), the beneficiaries will owe income tax at their ordinary income tax rate when they take the distribution.

*This is general information only and is not meant to be construed as legal or financial advice. Always consult with your own advisor before transferring any assets.