IRA Charitable Rollover

The IRA charitable rollover, also called a qualified charitable distribution (QCD), lets you make a gift during your lifetime from an asset that could otherwise be subject to multiple levels of taxation if it remained in your taxable estate.

To qualify

  • You must be age 70 ½ or older at the time of gift.
  • Transfers must be made directly from a traditional IRA account by your IRA administrator to Princeton Day School. Funds that are withdrawn by you and then contributed do NOT qualify. Gifts from 401k, 403b, SEP and other plans do not qualify.
  • Gifts must be outright. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities or to obtain other benefits such as tickets to athletics events, do not qualify.

Benefits—qualified charitable distributions

  • Can total up to $111,000 per taxpayer per year.*
  • Are generally not included in your gross income for federal income tax purposes on your IRS Form 1040 (no charitable deduction is available, however).
  • Can count toward your required minimum distribution, if you have one.

*The annual limit for QCDs from IRAs is indexed for inflation.

A separate provision allows a one-time QCD to fund a life-income gift, most often a charitable gift annuity (CGA) or a charitable remainder trust (CRT). This one-time transfer is capped at $55,000 (indexed for inflation) and must go to a qualified CRT, or to a charity in exchange for a CGA. Important terms and conditions apply—please contact our office or your own financial advisor.

This type of gift reduces the value of your IRA, which in turn can reduce your future RMDs, since they are based on the year-end balance. A CGA also provides fixed payments for life. Using a distribution from your IRA to fund an annuity is one way to diversify your holdings; your advisor can help you decide whether it fits your situation.

As always, we recommend that you consult your own legal and financial advisors before making a new gift commitment.

Example

Jane wants to contribute to Princeton Day School. She is 73* and is required to take a minimum distribution of $20,000 from her IRA but does not need the income. She can authorize the administrator of her IRA to transfer $20,000 to PDS. The $20,000 distributed to PDS will not be subject to federal tax and will be counted toward her annual minimum required distribution.

*Note that under the Secure Act 2.0, the age at which you are required to make minimum distributions (RMD) was raised to age 73 for individuals born between 1951 and 1959, and age 75 for those born in 1960 or later.

Sample letter

See below for a sample letter you can send to your plan provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can look for the check from your IRA administrator.

View Sample Letter

Please let us know about your plans by completing this form so we can personally thank you.