Distributions from Your IRA, 401(k) & 403(b)

If you are at least 72 years of age or older, you can take special advantage of federal tax law regarding your traditional IRA, 401(k) or 403(b), to make a gift to The Prep! Many alumni wisely use this now permanent law to their benefit by reducing their Adjusted Gross Income (AGI) which often reduces their cost for Medicare and prescription drug coverage. So you can help The Prep AND minimize your tax exposure from your tax deferred  distributions this year. If you are 72 or older and have an IRA, 401(k) or 403(b) plan, you must make a Required Minimum Distribution and pay federal taxes on it beginning again in 2021, so you may want to consider reducing or eliminating your tax burden and making a gift to The Prep directly.

The Qualified Charitable Distribution (QCD) is a terrific way to support The Prep and receive tax benefits in return. As you plan your required minimum distributions (RMD) for this year, consider using your IRA account to make the most of your charitable giving. You receive a tax benefit even if you take the standard deduction!

While the new SECURE Act has raised the age to 72 for Required Minimum Distributions (RMDs), donors may still make QCD gifts starting the year they turn 70 ½. Be sure to share this gift plan with your financial advisor.

For more information about a Qualified Charitable Distribution (QCD) from your IRA, 401(k) or 403(b) to satisfy your Required Minimum Distribution (RMD) this year, please contact Matt Cannizzo '90, Director of Institutional Advancement at mcannizzo@shp.org or at (973) 736-6861. Please consult with your financial planner as well.
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To Qualify:
  • You must be 70½ or older at the time of gift.
  • Distributions must be made directly from a traditional IRA account by your IRA administrator to Seton Hall Prep.
  • Gifts must be outright, meaning they go directly to Seton Hall Prep. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.
  • Gifts from 401k, 403b, SEP and other plans do not qualify. Ask your financial advisor if it would make sense for you to create a traditional IRA account so you can benefit from an IRA Qualified Charitable Distribution.

Tax Benefits:

  • IRA Qualified Charitable Distributions are excluded as gross income for federal income tax purposes on your IRS Form 1040.
  • The gift counts toward your required minimum distribution for the year in which you made the gift.
  • You could avoid a higher tax bracket that might otherwise result from adding an RMD to your income.
Another Example:

Bill Smith is 72 years old and wants to make a gift to The Prep. He has $300,000 in his IRA and wants to gift $10,000. He can authorize the administrator of his IRA to distribute $10,000 to SHP. Because the IRA Qualified Charitable Distribution is excluded from income, Bill will not be eligible for a charitable income tax deduction — but he still receives tax savings. The $10,000 distributed to SHP will be counted toward his annual required minimum distribution (RMD) and he will not pay income tax on the portion given to The Prep!
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