Are you at least 70½? The IRA Charitable Rollover provides you with an excellent opportunity to make a gift during your lifetime from an asset that would be subject to multiple levels of taxation if it remained in your taxable estate.
Suppose John wants to make a gift to The Foundation. He has $500,000 in his IRA and he wants the contribution to be $20,000. He can transfer the $20,000 to The Foundation. The $20,000 distributed to The Foundation will not be subject to federal tax and can be counted toward his annual minimum required distribution.
As you plan your required minimum distributions for this year, if you do not need the money the government is requiring you to take, consider using it for a charitable gift with the IRA Charitable Rollover.
The IRA Charitable Rollover allows individuals age 70½ and older to make direct transfers totaling up to $111,000 per year to 501(c)(3) charities, without having to count the transfers as income for federal income tax purposes.
Individuals who are age 70½ or older at the time of the contribution (you have to wait until 6 months after your 70th birthday to make the transfer).
Transfers must come from your IRAs directly to us.
If you have retirement assets in a 401k, 403b etc., you must first roll those funds into an IRA, and then you can direct the IRA administrator to transfer the funds from the IRA directly to The Foundation.
Tax exempt organizations that are classified as 501(c) (3) charities, including The Foundation, to which deductible contributions can be made.
Federal
You do not recognize the transfer to The Foundation as income, provided it goes directly from the IRA administrator to us; therefore, you are not entitled to an income tax charitable deduction for your gift.
State
Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still other states have no income tax at all.
We offer a sample letter you can send to your plan provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can look for the check from your IRA administrator.
Contact The Foundation today for more information on the
IRA Rollover and to receive a free estate planning guide.