New Tax Law May Make Giving A Qualified Charitable Distribution From Your IRA a Viable Option for Giving to UCE For Those 70 ½ or Older

The new tax law, which begins with 2018, increases the standard deduction to $12,000 for individuals and $24,000 for married couples. That may mean that those people who itemized deductions in the past may not have enough deductions, including charitable contributions, to exceed the standard deduction allowances, and will lose the tax benefit of such contributions. However, there is a way to make a Qualified Charitable Distribution (QCD) from an IRA that will not count as income if certain requirements are met.

Requirements. IRA owners must be age 70 1/2 or older to make a tax-free charitable contribution. Those who meet the age requirement can transfer up to $100,000 per year directly to an eligible charity such as UCE or UCE Endowment without paying income tax on the transaction. If you file a joint tax return, your spouse can also make a charitable contribution of up to $100,000, meaning couples can exclude up to $200,000 of their retirement savings from income tax if they donate it to charity (We should all be so lucky to be able to do this). Qualified Charitable Contributions must be made by December 31 each year in order to exclude that amount from taxable income, although a contribution can be made at any time during the year.

Charitable contributions can only be made from IRAs, not a 401(k) or similar type of retirement accounts. You need to transfer the money directly from the IRA to the charity for it to count as the tax-free transfer. Ask your IRA administrator and the charity about making a direct transfer, or you can have the IRA administrator send a check from your account to the charity.

An IRA charitable contribution also satisfies all or part of the Required Minimum Distribution (RMD) for your IRA.

If you have questions regarding Endowment contributions you can contact Endowment at endowment@ucevanston.org, or contact a member of the Endowment Committee.