With a qualified charitable distribution from an IRA, you may be able to save taxes, freeing up extra contributions for Redeemer.

If you are age 70½ or over, you can make contributions to the church from your IRA and the contributions receive favorable tax treatment.  The Internal Revenue Service calls this a qualified charitable distribution (QCD). Unlike a regular distribution from an IRA, the QCD is not included in the federal adjusted gross income calculation, so it is not subject to either federal or West Virginia income tax.  The federal and state tax savings may allow you to increase your contributions to the church.

You need to transfer the money directly from the IRA to the church for it to count as the tax-free transfer. You can have your IRA administrator send a check from your account to the church. If you have check-writing privileges for your IRA, you can write checks to the church.

If you have a 401K retirement account, you can even transfer money from that account to an IRA account and then make the QCD contribution.

An Example:

Consider an example of a household with income of $78,000 (median household income for zip code 25314).  After standard deductions the marginal tax rates are likely to be 12% for federal tax and 6% for WV tax.  For each $100 contributed from an IRA instead of from other sources, tax savings are $18. If you are in a higher tax bracket, the savings are even greater.  The savings can allow you to increase your contributions.

What to do next:

• See IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) for additional information. 

• Talk to your IRA administrator about how to make this happen for your IRA. 

• Contact Stewardship Chairperson Phil Gaarenstroom if you have other questions.