The IRA Charitable Rollover
In the past weeks, we have received many questions about the so-called IRA Charitable Rollover — an opportunity available now until year-end that enables our supporters to make a tax-free withdrawal from an individual retirement account (“IRA”), if the withdrawal is transferred directly to Guiding Eyes. Following are the answers to some of the more frequently-asked questions:
Who is eligible? Any limit on the gift? Those 70 ½ or over at the time of the gift can give total rollover gifts of any amount up to $100,000 by acting before December 31, 2013. At this time it is unclear if Congress will extend the provision beyond 2013. If you’re under 70 1/2, feel free to share this information with a friend who might benefit.
Do all of types of retirement plans qualify? Only traditional and Roth IRAs are eligible. Assets in other types of retirement accounts, such as 401(k)s, 403(b)s, etc., must first be “rolled over” into an IRA before they are contributed.
Can a supporter write a personal check to us after having received a distribution? No. The distribution must be made directly by the IRA administrator or trustee to Guiding Eyes.
Can IRA Charitable Rollovers be used to fund life-income gifts, such as charitable gift annuities? Only outright gifts qualify. Rollovers can, however, be used for gifts “in memory or in honor of,” or gifts to be recognized by a plaque in the name of the donor or another.
What About Required Minimum Distributions? Amounts transferred to Guiding Eyes as an IRA Charitable Rollover count toward minimum distribution requirements.
Is the gift tax-deductible? No deduction is available because the IRA withdrawal is not reported as income.
Who would benefit from an IRA Charitable Rollover? Friends 70 ½ or older who do not need all of the income from their IRA, and who:
- Do not itemize their deductions. But for the rollover provision, non-itemizers would count the IRA distribution as income, but would not be able to claim an offsetting charitable deduction.
- Itemize, but cannot fully deduct their charitable gifts because they have reached applicable charitable deduction ceilings, or their itemized deductions are subject to reduction.
What about state income taxes? The charitable rollover provisions apply to federal income taxes. Charitable rollovers may be treated differently for state income tax purposes. The rules vary from state to state.
How can I do an IRA Charitable Rollover? For more information, please contact Gail Resnikoff, Director of Planned Giving, at 914-243-2237 or at firstname.lastname@example.org.
The foregoing is intended to convey general information only, and does not constitute legal, tax, or financial advice. We strongly suggest that you consult with your professional adviser before making a charitable gift.