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Charitable IRA Rollovers

Charitable IRA Rollovers

Did you know…

A Tax-Free Charitable IRA Rollover can allow you to do more with your nest egg and end-of-year giving

The charitable IRA rollover allows you to make charitable gifts directly from your IRA to your favorite organization. The amount that is sent directly to charitable organizations counts toward your Required Minimum Distribution for the year, as if you had received it yourself. However, because the funds went to charitable organizations, you pay no income tax.

With the IRA rollover option, regardless of the 2018 tax bill outcomes, you can still receive tax savings by avoiding the income tax you would have paid for taking the required minimum distribution. This tax saving aspect is available to those who itemize as well as those who don’t.

Let’s review the basics.

>  The rollover is available only from IRA accounts. This cannot be done directly from other retirement accounts such as a 401(k) or 403(b) accounts. (Some donors may be able to complete a two-step process by making a tax-free rollover from these accounts into an IRA and then making an IRA rollover gift from that new account).

>  The donor must have reached age 70 ½ (the age when required minimum distributions begin).

>  Each individual donor can make IRA rollover gifts of up to $100,000 per year (which can be to one charitable organization or divided and distributed to many charitable organizations). Married couples can each give up to $100,000, so long as they each have IRA accounts.

>  Rollover gifts cannot be used to fund charitable gift annuities or charitable remainder trusts. They also cannot be transferred to donor advised funds.

>  The donor cannot receive any value in return for the gift. For example, some alumni associations accept donations that include a subscription to the alumni magazine. They report back to the donor a reduced charitable gift value that has been discounted by the value of the subscription. The IRA rollover should not be used to fund such gifts.

Call us with any questions at 765-662-0065. 

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