Your Individual Retirement Account (IRA) has been a wonderfully tax-efficient method to save for your retirement. However, you will pay income tax on withdrawals from your IRA and, if you are age 73 or older, you are required to make withdrawals each year. Recent changes allow you to make tax-savvy charitable contributions to Brown from your IRA. Here are two opportunities:
Qualified Charitable Distribution (QCD)
If you are 70½ or older, you can make a tax-free Qualified Charitable Distribution (QCD) to Brown via your IRA administrator. Although there is no charitable deduction for your QCD, you will avoid income tax on the withdrawal, which provides a similar tax result.
If you are aged 73 or older, you can meet your Required Minimum Distributions (RMD) in part or in full through a QCD to Brown. The portion of your RMD you use to make your gift will not be included in your taxable income.
Beneficiary Designation
If you are considering a legacy gift, designating Brown as a beneficiary of your IRA or other qualified retirement plan can provide tax savings for your heirs. If you leave your IRA to your heirs, they will pay income tax—at their own personal rates—whenever they withdraw the funds. Directing your IRA to Brown and leaving other untaxed assets to your heirs instead is a way to pass some tax savings on to the next generation.
We’d be happy to discuss these charitable opportunities, which allow you to support Brown while saving you taxes.