IRA Charitable Rollover Contributions
The IRA Rollover was first enacted in 2006 as part of the Pension Protection Act. Since the provision was first enacted, Americans have made millions of dollars of new contributions to nonprofits that benefit people every day.
On December 18, 2015, the President signed legislation that made permanent the special IRA rollover incentive for gifts made in 2015 and future years.
Individuals 70½ or older can make a charitable gift from a traditional or Roth IRA accounts and reap tax advantages. A total of up to $100,000 can be transferred directly from traditional or Roth IRAs to The Library Foundation and other IRS qualified charities free from federal income tax. There can also be state income tax savings. Amounts given in this way this year count toward your required IRA minimum withdrawal amounts for 2016.
To make this qualified gift, it must be distributed directly from an IRA to a charity such as The Library Foundation. If you have check writing privileges on your IRA account, you can make the gift directly from your IRA.
- Eligibility Age. Taxpayers age 70½ and older are required to make annual distributions from their IRAs which are then included in the taxpayers’ adjusted gross income (AGI) and subject to taxes.The IRA Charitable Rollover permits those taxpayers to make donations directly to charitable organizations from their IRAs without counting them as part of their AGI and, consequently, without paying taxes on them.
- Annual Cap. The annual cap for a donor’s total combined charitable IRA rollover contributions is $100,000 in any one year.
- Eligible Charities. Charitable contributions from an IRA must go directly to a public charity. The Library Foundation is a qualified public charity. Contributions to donor-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA rollover contributions.
- Eligible Retirement Accounts. Distributions can only be made from traditional Individual Retirement Accounts or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are ineligible for the tax-free treatment.
- Directly to the Charity. Distributions must be made directly from the IRA trustee payable to the public charity.
- No Gifts in Return. Donors cannot receive any goods or services in return for charitable IRA rollover contributions in order to qualify for tax-free treatment.
- Written Receipt. In order to benefit from the tax-free treatment, donors must obtain written substantiation of each IRA rollover contribution from each recipient charity.
If you have any questions, please contact Laura Fay at 503-223-4385 or talk with your tax advisor for more information.