Supporters of John Paul II Center can ensure the organization continues assisting students with special needs by directing their required distributions from their tax-deferred IRA retirement accounts to John Paul II Center.
If you are age 70½ or older, IRS rules require you to take required minimum distributions (RMDs) each year from your tax-deferred retirement accounts. Those accounts include various IRAs. When an individual takes the RMD as income, it will be taxed. To eliminate or reduce the tax impact of RMD income, individuals should consider donating to charity through a qualified charitable distribution (QCD).
A QCD is a direct transfer of funds from an IRA account, payable to a qualified charity. A charitable donation, up to $100,000 per year ($200,000 for joint returns), distributed as a QCD may be counted toward satisfying your RMD for the year. Because it is a charitable donation, the RMD may be excluded from your taxable income. This is not the case with a regular withdrawal from an IRA, even if you use the money to make a charitable contribution. The funds would be counted as taxable income even if you later offset that income with the charitable contribution deduction.
If you have retirement assets in a 401(k) plan, you can roll those funds over from the 401(k) to an IRA to benefit from a tax-free charitable contribution.
With recent tax law changes and pending legislative changes, all individuals should consult their tax advisers to determine what is the best option for them when considering a QCD from an IRA account to benefit John Paul II Center for Special Learning.
The charitable donations can be sent directly to the John Paul II Center for Special Learning as part of an annual gift, a special gift or a gift to the John Paul II Center for Special Learning Endowment Fund. The endowment fund was started in 2013 with a gift from long-time JPII donor John Horrigan in memory of his wife Peggy. It is managed by the Catholic Foundation of Eastern Pennsylvania.
Key points to remember:
- You must be at least 70½ years old at the time you request a QCD. If you process a distribution prior to reaching age 70½, the distribution will be treated as taxable income. NOTE: There is pending legislation that may change the minimum age to 72.
- The QCD must be paid directly to the charity. A donor may request their IRA custodian to issue a check in the charity’s name (i.e., John Paul II Center for Special Learning OR Catholic Foundation of Eastern Pennsylvania for the John Paul II Endowment Fund).
- If the distribution is paid to the individual and then they write a check to a charity, it will still be counted as income and taxed.
- For a QCD to count toward your current year’s RMD, the funds must come out of your IRA by your RMD deadline, which is generally December 31 each year.
- $100,000 is maximum total amount allowed per individual for an QCD from an IRA account in a calendar year, or $200,000 for joint returns.