As you approach retirement, you may be looking for ways to give back to the causes you care about. The charitable IRA rollover is one strategy that can help you maximize your giving while also providing tax benefits. In this guide, we’ll explore what the charitable IRA rollover is, how it works, and how you can take advantage of it in 2015.
What is a Charitable IRA Rollover 2015?
A charitable IRA rollover 2015, also known as a Qualified Charitable Distribution (QCD), is a way for individuals who are 70 ½ years old or older to donate up to $100,000 per year to a qualified charitable organization directly from their IRA. This donation can count toward the individual’s required minimum distribution (RMD) and is excluded from their taxable income.
How Does a Charitable IRA Rollover Work 2015?
To make a charitable IRA rollover 2015, you must first have an IRA account with funds available for distribution. You can then make a direct transfer of up to $100,000 per year from your IRA to a qualified charitable organization of your choice. The transfer must be made directly from the IRA custodian to the charity and cannot be made to an individual or private foundation.
The charitable IRA rollover can count toward your RMD for the year in which the donation is made. This can be particularly beneficial if you do not need the full amount of your RMD for personal expenses and would like to use some of it to support charitable causes.
What are the Benefits of a Charitable IRA Rollover?
There are several benefits to making a charitable IRA rollover:
1. Tax Savings
The donation is excluded from your taxable income, which can lower your overall tax burden for the year. This can be particularly beneficial if you are subject to a high income tax rate.
2. Avoiding the Medicare Surtax
If your income exceeds certain thresholds, you may be subject to the Medicare surtax, which adds an additional 0.9% tax on top of your regular Medicare tax. By making a charitable IRA rollover, you can reduce your taxable income and potentially avoid the surtax.
3. Supporting Charitable Causes
Making a charitable donation can provide a sense of satisfaction and fulfillment, knowing that you are supporting causes that align with your values.
How to Take Advantage of a Charitable IRA Rollover in 2015
If you’re interested in making a charitable IRA rollover in 2015, there are a few things to keep in mind:
You must be 70 ½ years old or older to make a charitable IRA rollover.
The deadline for making a charitable IRA rollover in 2015 is December 31st. This means that the transfer must be completed by this date in order for it to count toward your RMD for the year.
3. Qualified Charitable Organizations
The charitable organization must be a qualified charity under IRS rules. This includes most 501(c)(3) organizations, but it’s important to confirm that the organization you want to support is eligible.
4. Proper Documentation
Be sure to obtain proper documentation of the charitable donation, including a receipt or letter from the organization confirming the donation amount and date.
The charitable IRA rollover can be a powerful tool for maximizing your giving and minimizing your tax burden. By making a direct transfer from your IRA to a qualified charitable organization, you can support causes you care about while also taking advantage of tax benefits. If you’re interested in making a charitable IRA rollover in 2015, be sure to consult with your financial.