The IRA charitable rollover has proven a popular way for donors to support their favorite causes. It enables donors to make a gift to charity from their IRA and not include the distributed amount in their taxable income. Beyond making it easier to make gifts from their IRA, this can be advantageous for donors from a tax standpoint if:
- They do not itemize deductions.
- They pay state income tax but cannot take charitable deductions on the state return.
- They would not be able to deduct all of their charitable contributions because of deduction limitations.
- An increase in taxable income may negatively impact their ability to use other deductions.
- The donor must be at least 70 1/2 years of age when the gift is made.
- The transfer must be made directly from the IRA administrator to the charity.
- The gifts from the IRA cannot exceed $100,000 per person or $200,000 for a couple in a given year.
- They can only be outright gifts (they cannot fund a charitable gift annuity or charitable trust).
- No goods or services can be given in exchange.
- The gift cannot be made to a donor-advised fund or a supporting organization.
If donors did not make a qualifying gift in 2012 but would still like to, they can do so in one of two time-limited ways:
- Make a 2012 IRA rollover in January 2013. A donor can do a rollover gift in January and elect to have this be considered made in 2012. There is a short window of opportunity for this--it must be made by the end of January. How the election is to be made will be specified by the secretary of the Treasury Department later this year (presumably before April 15!).
- Convert a December 2012 IRA distribution into a 2012 IRA charitable rollover gift. Some donors waited to take their required minimum distributions until December, hoping that the IRA rollover would be extended for 2012. If that is the case, and the distribution meets all of the IRA rollover criteria except for the direct transfer to charity requirement, donors can now claim it as a charitable rollover gift in 2012, to the extent that they now transfer the distribution in cash to the qualifying organization.
It is not clear at this time what the Internal Revenue Service will require from the taxpayer (donor) to document this gift arrangement. Please contact the Brethren Foundation if you would like to receive this information when it becomes available.
This is great news for the not-for-profit community and its donors, and a good way to start the new year!
-- From the Newsline editor: Our thanks to Brethren Benefit Trust (BBT) staff Brian Solem for submitting this report to Newsline, with information provided by PGCalc.
Contact the Brethren Foundation if you would like to receive more information about the IRS requirements to document rollover gifts, when it becomes available. Call 888-311-6530 or 847-695-0200 or e-mail email@example.com.
Contact the Church of the Brethren Donor Relations team for more information or help with giving a gift to the Church of the Brethren denomination: John R. Hipps at firstname.lastname@example.org or Mandy Garcia at email@example.com.
Church members interested in supporting other Church of the Brethren-related agencies through the IRA charitable rollover are encouraged to contact those organizations directly. A directory of church agencies is available at www.brethren.org/about/directory.html.
Source: 1/10/2013 Newsline