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If you are 70½ years old or older, you can take advantage of a simple way to benefit the Smithsonian Institution and receive tax benefits in return. You can give any amount up to $105,000 per year from your IRA directly to a qualified charity such as ours without having to pay income taxes on the money. This popular gift option is commonly called the IRA charitable rollover, but you may also see it referred to as a qualified charitable distribution, or QCD for short.
You also now have the option to fund your gift annuity with IRA assets. You may make a one-time election for a qualified charitable distribution of up to $53,000 (without being taxed on the gift). While there is no charitable deduction for a gift from your IRA assets, it is free of federal income tax and is excluded from your gross income. If you are required to take minimum distributions, you can satisfy all or part of that obligation. This option is only available for you and/or your spouse, and all payments are taxed as ordinary income.
Why Consider This Gift?
- Your gift will be put to use today, allowing you to see the difference your donation is making.
- You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.
- Beginning in the year you turn 73, you can use your gift to satisfy all or part of your required minimum distribution.
- Since the gift doesn’t count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.
Frequently Asked Questions
Q. I've already named the Smithsonian Institution as the beneficiary of my IRA. What are the benefits if I make a gift now instead of after my lifetime?
A. By making a gift this year of up to $105,000 from your IRA, you can see your philanthropic dollars at work. 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 as long as it is $105,000 or less for the year.
Q. Can I receive any member benefits with my gift?
A. The only permissible benefits that may be accepted with a charitable IRA rollover gift are those that do not have a value for tax purposes. If you wish to pay for a membership from your IRA and receive benefits that have a value, like the magazine, you can make the membership payment from a taxable distribution from your IRA and be eligible for a charitable deduction for the gift portion of the membership. At the Smithsonian, a charitable IRA rollover gift is allowed to count toward naming opportunities and toward recognition society memberships.
Additionally, if you decide to make a gift of the proceeds from an IRA at your demise (see Beneficiary Designations under Popular Gifts), you can qualify as a member of the Smithsonian Legacy Society.
Q. Can I use the transfer to fund life-income gifts like charitable remainder trusts or charitable gift annuities?
A. Yes! If you are 70½ or older, you may now make a one-time election for a qualified charitable distribution of up to $50,000 (without being taxed) from your IRA to fund a life-income gift. Some limitations apply, so contact us for more details and a personalized illustration at no obligation.
Q. I'm turning age 70½ in a few months. Can I make this gift now?
A. No. You must be 70½ by the date you make the gift.
Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes. Direct gifts to a qualified charity 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 directly to the Smithsonian Institution. To determine if a rollover to an IRA is available for your plan, speak with your plan administrator.
Q. Can my gift be used as my required minimum distribution under the law?
A. Yes, absolutely. Beginning in the year you turn 73, you can use your gift to satisfy all or part of your required minimum distribution.
Q. When do I need to make my gift?
A. We must receive your gift by Dec. 31 for your donation to qualify this year. If you have check-writing features on your IRA, please be aware that your check must clear your account by Dec. 31 to count toward your required minimum distribution for the calendar year.
Q. Do I need to give my entire IRA to be eligible for the tax benefits?
A. No. You can give any amount under this provision, as long as it is $105,000 or less per year. If your IRA is valued at more than $105,000, you can transfer a portion of it to fund a charitable gift.
Q. I have two charities I want to support. Can I give $105,000 from my IRA to each?
A. No. Under the law, you can give a maximum of $105,000. For example, you can give each organization $52,500 this year or any other combination that totals $105,000 or less. Any amount of more than $105,000 in one year must be reported as taxable income.
Q. My spouse and I would like to give more than $105,000. How can we do that?
A. If you have a spouse (as defined by the IRS) who is 70½ or older and has an IRA, he or she can also give up to $105,000 from his or her IRA.
