Charitable IRA Rollover
BREAKING NEWS! Charitable IRA rollover renewed for 2015 and beyond. Act quickly to complete your gift before the Dec. 31, 2015, deadline.
The new law made the IRA charitable rollover retroactive to Jan. 1, 2015, and will remain in effect for 2016 and beyond.
Donors 70½ or older are once again eligible to move up to $100,000 from their IRAs directly to qualified charities without having to pay income tax on the money.
Here is a recap of the IRA charitable rollover rules. Your donor can make a direct transfer if:
Frequently Asked Questions
What is a charitable IRA rollover?
The charitable IRA rollover, or qualified charitable distribution (QCD), is a special provision allowing certain donors to exclude from taxable income -- and count toward their required minimum distribution -- certain transfers of Individual Retirement Account (IRA) assets that are made directly to public charities, including North Cross School.
Many donors age 70 1/2 or older have used this popular option to support the areas of their choice with tax-wise gifts ranging from $100 to $100,000.
The provision was first enacted for tax years 2006 and 2007, and has been extended periodically.
How does this help me?
A charitable IRA rollover makes it easier to use IRA assets, during lifetime, to make charitable gifts.
Why will lifetime IRA gifts be easier?
Under current law, withdrawals from traditional IRAs and certain Roth IRAs are taxed as income, even if they are immediately directed to a charity. The donor receives a tax deduction for his or her donation, but various other federal, and sometimes state, tax rules can prevent the deduction from fully offsetting this taxable income. As a result, many donors have chosen not to use IRA assets for lifetime gifts. The charitable IRA rollover eliminates this problem for a limited time.
What gifts would qualify for a 2015 charitable IRA rollover?
A gift that qualifies, technically termed a “qualified charitable distribution,” would be:
Is there a limit on the amount that can be given?
Yes, there is a limit. An individual taxpayer's total charitable IRA rollover gifts cannot exceed $100,000 per tax year.
What about the required minimum distribution?
If you have not already taken your required minimum distribution in a given year, a qualifying rollover gift can count toward satisfying this requirement.
Is an income tax deduction also available?
No. The gift would be excluded from income, so providing a deduction in addition to that exclusion would create an inappropriate double tax benefit.
Why are Roth IRAs included? Aren’t withdrawals from a Roth IRA tax-free?
Withdrawals from a Roth IRA may be tax-free only if the account has been open for longer than five years or if certain other conditions apply. Otherwise, withdrawals are taxed as if they came from a traditional IRA. Therefore, certain Roth IRAs could benefit from a charitable IRA rollover.
Can other retirement plans, such as 401(k) and 403(b) accounts, be used?
No. However, it may be possible to make a tax-free transfer from such other accounts to an IRA, from which a charitable rollover can then be made.
Can a gift be made to any charity?
No. Excluded are:
Who can benefit from using the charitable IRA rollover to make a gift?
Can a rollover gift be used to fund a charitable remainder trust or charitable gift annuity?
No. The donor can receive no benefits in return for the gift. This includes life income plan payments.
What if a withdrawal does not meet the requirements of a charitable IRA rollover?
It simply will be included in taxable income as other IRA withdrawals currently are.
Is the charitable IRA rollover right for everyone?
While this is a great option, other types of gifts may provide donors with more tax benefits. As with any gift planning question, donors should consult their tax professionals for specific advice.
Can I still make a gift with an IRA beneficiary designation?
Absolutely! Whether or not you choose to make a charitable IRA rollover gift, you can still designate North Cross School as a beneficiary to receive IRA assets after your lifetime. The lifetime charitable IRA rollover is simply another option for donors who would like to see their philanthropy at work now.
If I made a charitable IRA rollover gift in other tax years, can I do this again for the 2015 tax year?
Yes. Even if you and your spouse both made the maximum $100,000 charitable IRA rollover gift to a qualifying charity during one or more previous years, you can still take advantage of this legislation again for the 2015 tax year.
Contact Chris Moore at 540-989-6641 ext. 271 or via email at email@example.com, but more importantly please consult with your tax advisor of financial consultant.
North Cross School is actively planning for the education of tomorrow’s students, and as part of that planning, is pleased to announce the creation of the Heritage Society honoring alumni, parents and friends who have made arrangements for planned gifts to the school. Our sincere appreciation is extended to the following Heritage Society members:
Mr. and Mrs. John T. Cunningham III
Mrs. Charles L. Crockett, Jr.
Mr. and Mrs. J. Rand Garrett III
Mr. and Mrs. David R. Lake
Mr. and Mrs. Bittle W. Porterfield, III
Mr. and Mrs. John S. Ross, Jr.
Planned Giving Reply Card
Click here for a Planned Giving Reply Card, which can be filled out and returned to the School.