The IRA Gift – Doing Good While Saving Taxes

You may find yourself among the majority of taxpayers these days who no longer itemize their income tax deductions and cannot enjoy the tax advantages of the charitable contribution deduction. However, there is good news for donors age 70½ or older. A qualified charitable distribution (QCD), sometimes called the “IRA Charitable Rollover,” can provide you the same tax benefit as a charitable deduction even if you do not itemize.

Ordinarily, you will owe income tax on any withdrawal from your IRA. However, there is no income tax on a QCD--because a QCD contribution is not included in your taxable income, the tax result is similar to a tax-deductible gift to charity. In fact, a QCD can be even better than a charitable deduction because lowering your taxable income can also reduce taxes you might owe for Social Security as well as your Medicare premiums. Finally, if you must take required minimum distributions (RMD), your QCD contribution will count toward your RMD without adding to your taxable income.

There are some of the requirements for a QCD contribution:

• You must be 70½ or older at the time of your contribution.
• If you are 73 or older, your contribution will count towards your RMD, with no tax on the distribution.
• Your contribution must go directly from your IRA to St. George’s School. 
• There is a limit of $111,000 in 2026, although spouses with their own IRA accounts can each make gifts of up to $111,000 from their own account.

If you are 70½ or older, and especially if you no longer itemize your income tax deduction, a QCD can be a very tax-smart strategy. In addition to the tax savings, you will be making an immediate impact at St. George’s.

Your IRA administrator can help you make a QCD. Often it is as simple as completing a form on their website directing a QCD to St. George’s School. We would be happy to work with you to complete your QCD contribution.