You spent your working years saving up for retirement. But you also made sure you donated regularly to charity. Once you have retired, your income may be limited, but you don't want to give up on your philanthropic goals. How can you keep donating to your favorite charity(s) during retirement?
One tax-efficient and simple way to make a charitable gift is by using your IRA. You can give during your lifetime and avoid the income tax normally associated with taking required minimum distributions from your IRA.
Who qualifies? Individuals who are age 70½ or older at the time of the charitable contribution may transfer funds directly from their traditional or Roth IRA to a qualified nonprofit organization such as Lutheran Hour Ministries (LHM). If you are 72 or older, you can also use this transfer to satisfy your Required Minimum Distribution (RMD). Beginning in 2023, the age for RMD will be 73 years old.
How much can you transfer? Each individual may transfer up to $100,000 per year. If your spouse has a separate IRA, he or she can also make a charitable IRA rollover gift. Remember that any amount transferred counts toward your RMD.
What are the tax implications? The amount you transfer will not be included in your taxable income as long as it is transferred directly from your IRA administrator to LHM.
What factors make this the right gift for you? 1) You wish to make an outright gift to LHM that will have an immediate impact on sharing the Gospel around the world; 2) you do not need the additional income necessitated by your required minimum distribution; 3) you have already maxed out your charitable tax deductions for the year—a charitable distribution from an IRA operates separately from the tax rules that limit the benefit of individual charitable giving.
How do you make your gift? Consult with your tax advisor to make sure that a gift made through your IRA is a good fit for you. After that, simply contact your IRA administrator and request that a distribution be made directly to LHM. To use assets from another retirement plan, such as a 401(k), first move these funds into a traditional or Roth IRA, then transfer them to LHM. You can also designate LHM as a beneficiary of your retirement plan.
Questions about IRAs or other gift options? Contact our gift planning staff at 1-877-333-1963 or lhm-gift@lhm.org.