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Gifts from Retirement Accounts

What is Qualified Charitable Distributions (QCD) 

Usually, when individuals take distributions from their Individual Retirement Accounts (IRAs), it counts as income for tax purposes. An IRA charitable rollover also called a Qualified Charitable Distribution (QCD), is an exception. Individuals aged 70.5 and older can distribute up to $100,000 each year from their IRAs to their favorite 501(c)(3) without counting the distribution as income or RMD. QCD is limited to IRAs only. If you want to donate from your 401k or other retirement accounts of different types, you will need to rollover funds to an IRA first to be qualified. The IRS provides additional useful information on Qualified Charitable Distributions here. 

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What is a Required Minimum Distribution (RMD)?

The Required Minimum Distribution (RMD) is the smallest amount certain individuals must distribute from their IRA each year. The penalty for missing an RMD is 50% of the amount that was supposed to have been distributed! 

Whether you are subject to the RMD depends on your age. Because of recent changes in the law, you are subject to the RMD if you either (i) were 70.5 years old or older at any point in 2019, or (ii) are currently 72 years old or older. 

The IRS provides additional useful information on RMDs here. 

 

Changes from the SECURE Act 

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act), in effect as of Jan. 1, 2020, changes rules on funding retirement savings. 

Previously, most retirees were required to take a Required Minimum Distribution (RMD) from their retirement accounts at age 70½. The new beginning date for RMDs will be age 72. (However, if you reached age 70½ by the end of 2019, your RMD beginning date is set, and the SECURE Act does not change the requirement date for you.) 

It is important to note that the SECURE Act does not change the age at which you can make a Qualified Charitable Distribution (QCD) from your IRA, which remains at age 70½. 

The SECURE Act also removed certain provisions for beneficiaries of IRAs and defined contribution plans like 401(k)s. Most IRA beneficiaries will now have to distribute their entire inherited retirement account within 10 years of the year of death of the owner. In some cases, it might make sense to leave your IRA to a charity and purchase life insurance for your children or create a charitable remainder trust to maximize legacy benefits. 

Speak to a qualified professional about these new rules and your financial and retirement situation. 

How to Give Qualified Charitable Distributions (QCD) 

Write an instruction letter or contact your IRA administering company to fill out the QCD form with Foundation information, including EIN# 83-0689060. The check should be payable to  

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National Tsing Hua University North America Foundation Inc  

777 Alexander Road, suite 102  

Princeton, New Jersey, 08540 

EIN# 83-0689060 

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Please contact us at treasury@nthu-na-foundation.org shall there be any questions. 

A Sample Instruction Letter to IRA administering company: 

Dear Sir or Madam:  

  

Please accept this letter as my request to make a direct charitable distribution from my Individual Retirement Account # [Account Number].  

  

Please send me the appropriate forms to issue a check or wire transfer from my IRA account in the amount of $___________ payable to National Tsing Hua University North America Foundation Inc , (tax identification number EIN# 83-0689060), as follows:   

   

Please mail the check to:   

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National Tsing Hua University North America Foundation Inc  

777 Alexander Road, suite 102  

Princeton, New Jersey, 08540 

EIN# 83-0689060  

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In your transmittal to National Tsing Hua University North America Foundation Inc, please reference my name and address as the donor of record in connection with this transfer, and copy me on your transmittal.  

  

If you have any questions or need to contact me, I can be reached at (telephone).  

  

Thank you for your assistance in this matter.  

  

Sincerely, 

Name NTHU-NA as a Beneficiary to Receive Your Retirement Assets  

Retirement plans are among the most highly taxed assets in an estate: 50% or more of the assets can be lost to estate and income taxes. 

 

When you name a charity as a beneficiary to receive your retirement assets upon your death, rather than donating retirement assets during your lifetime, the benefits can multiply: 

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  • Neither you and your heirs nor your estate will pay income taxes on the distribution of the assets. 

  • Your estate will need to include the value of the assets as part of the gross estate but will receive a tax deduction for the charitable contribution, which can be used to offset the estate taxes. 

  • Because charities do not pay income tax, the full amount of your retirement account will directly benefit the charity of your choice. 

  • It’s possible to divide your retirement assets between charities and heirs according to any percentage you choose. 

  • You have the opportunity to support a cause you care about as part of your legacy. 

  

Information needed for beneficiaries information: 

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EIN# 83-0689060   

National Tsing Hua University North America Foundation Inc 

777 Alexander Road, suite 102  

Princeton, New Jersey, 08540 

treasury@nthu-na-foundation.org 

Questions?

Please e-mail treasury-admin@nthu-na-foundation.org

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