IRA Charitable Giving FAQsPage address: http://www.mnsu.edu/giving/waystogive/annual/iragivingfaq.html
A Smart Way to Invest in Minnesota State Mankato
Because a Qualified Charitable Distribution (QCD) is not included in income as a distribution, tax-wise, this is better than taking a taxable IRA distribution and trying to offset it with a charitable contribution deduction.
What is a QCD?
Generally, a Qualified Charitable Distribution (QCD) is an otherwise taxable distribution from a traditional IRA owned by an individual who was age 70½ or older (on or before December 31, 2019) that is paid directly from the IRA to a qualified charity, like the Minnesota State Mankato Foundation. Amounts distributed as a QCD can be counted toward satisfying your Required Minimum Distribution (RMD) for the year, up to $100,000, and can also be excluded from your taxable income. Individuals turning 70½ after December 31, 2019 are not eligible to take a QCD until age 72.
Is a QCD better than taking the minimum distribution and sending Minnesota State University Mankato a check?
Yes. Because a QCD is not included in income as a distribution, tax-wise, this is better than taking a taxable IRA distribution and trying to offset it with a charitable contribution deduction. Funds must be transferred directly from the IRA to an eligible charity by the IRA trustee in order to qualify for the tax break. If you withdraw the money from your IRA and later donate it, it won't qualify as a tax-free qualified charitable distribution.
I've already named the Minnesota State Mankato Foundation as the beneficiary of my IRA. What are the benefits if I make a qualified charitable distribution now?
By making a gift this year of up to $100,000 from your IRA as a qualified charitable distribution, your philanthropic dollars make an immediate impact. You are jump-starting the legacy you would like to leave and giving yourself the joy of watching your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have made by transferring that amount from your IRA.
I'm turning age 70½ in a few months. Can I make this gift now?
No. New legislation requires you to be at least age 72 at the time you make the gift. Individuals turning 70½ after December 31, 2019 are not eligible to take a QCD until age 72.
Can my gift be used as my required minimum distribution under the law?
If you have not yet taken your required minimum distribution, the IRA charitable qualified charitable distribution gift can satisfy all or part of that requirement. Contact your IRA custodian to complete your gift.
Do I need to give my entire RMD to be eligible for the tax benefits?
No. You can give any amount under this provision, as long as it is $100,000 or less this year. If your IRA is valued at more than $100,000, you can transfer a portion of it to fund a charitable gift.
I have two charities I want to support. Can I give $100,000 from my IRA to each?
No. Under the law, you can give a maximum of $100,000. For example, you can give each organization $50,000 this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.
My spouse and I would like to give more than $100,000. How can we do that?
If you have a spouse (as defined by the IRS) who was 70½ (on or before December 31, 2019) or older and has an IRA, he or she can also give up to $100,000 from his or her IRA.
Can a qualified charitable distribution gift be used to maintain or improve my place in a Donor Society?
Yes. Your charitable gift through an IRA qualified charitable distribution is included as part of your giving history and your cumulative lifetime giving.
Are there any benefits that a donor can receive?
At Minnesota State Mankato, an IRA qualified charitable distribution gift is allowed to count toward naming opportunities and toward recognition society memberships for lifelong giving. It can also be used to satisfy existing pledges. It may not be used for giving where membership has benefits, or the donor is receiving something in exchange for their contribution.
I have several retirement accounts—some are pensions, and some are IRAs. Does it matter which retirement account I use?
Yes. A qualified charitable distribution (QCD) made directly to a qualified charity, like the Minnesota State University Mankato Foundation, can be made only from an IRA. Under certain circumstances, however, you may be able to roll assets from a pension, profit sharing, 401(k) or 403(b) plan into an IRA and then make the transfer from the IRA to Minnesota State Mankato Foundation. To determine if an IRA rollover is available for your plan, speak with your plan administrator.
Can I itemize my QCD as a deductible charitable contribution?
No. The key benefit of a QCD is that the distribution amount is not included on your Form 1040 as income. That's a good thing, but there's a bit of a downside, too. The QCD cannot also be used as a deductible charitable contribution if you itemize your deductions. That would be something of a double tax break for the same transaction. As a practical matter, the Tax Cuts and Jobs Act effectively doubled standard deductions for all filing statuses beginning in 2018, so itemizing might be less advantageous for some taxpayers now than it was in previous years anyway. You would need more in overall itemized deductions than the standard deduction for your filing status to make itemizing worthwhile.
Can I designate my gift to a specific program or department?
Yes. Please contact Cindy Arndt if you wish to designate your gift to be used for a specific purpose, program or department. cynthia.arndt@mnsu or (507)389-6829
It is wise to consult with a tax professional if you are contemplating a qualified charitable gift. The information on this website is not intended as legal or tax advice. References to tax rates include federal taxes only. State law may further impact your individual results. Tax laws can change, and the above information may not reflect the most recent changes. Please consult with an attorney or a tax professional for the most up-to-date advice. The information contained on this page is not intended as tax advice and it is not a substitute for tax advice.
For general information about making a gift, please contact:Kent Stanley
Vice President of University Advancement
Minnesota State University, Mankato
224 Alumni Foundation Center
Mankato, MN 56001