IWA Foundation - Planned Giving Blog
70 1/2 or Older?
IRA Charitable Rollover Is Back, and This Time It's PERMANENT!
The Protecting Americans from Tax Hikes (PATH) Act of 2015, which was passed by Congress and signed into law by the president on December 18, 2015, made permanent what is popularly known as the IRA charitable rollover.
Charitably minded taxpayers have enthusiastically embraced the IRA charitable rollover as an opportunity to transfer up to $100,000 each year to charity without it being treated as a taxable distribution. Despite its popularity since being introduced in 2006, the IRA charitable rollover has faced extinction several times and had actually expired on December 31, 2013. Now it has been reinstituted and made permanent.
Here are the requirements and restrictions for making an IRA charitable rollover gift:
- The donor must be 70 1/2 or older.
- The gift must be made directly from the IRA to an eligible charitable organization.
- Gifts to all charities combined cannot exceed a total of $100,000 per taxpayer for the year.
- The gifts must be outright, and no material benefits can be received in return for the gifts. Thus a transfer for a gift annuity, charitable remainder trust, or pooled income fund is not permitted.
- Gifts cannot be made to a donor advised fund, supporting organization, or private foundation.
- The gift is not included in taxable income, and no charitable deduction is allowed.
- The gift can only be made from an IRA. Gifts from 401(k), 403(b), and 457 plans are not permitted.
- If you meet the above conditions and made a transfer in 2015 from your IRA in anticipation of the legislation being extended, your transfer will be treated as a qualified rollover.
This may be the right gift for you to make if:
- You want to make a charitable gift and your IRA constitutes the largest share of your available assets.
- You are required to take a minimum distribution from your IRA, but you do not need additional income.
- You do not itemize your deductions. In that case a personal IRA distribution increases your taxable income without the benefit of an offsetting deduction. An IRA charitable rollover will not be included in your taxable income even if you do not itemize other deductions.
- You would like to make an additional charitable gift, but it would not be deductible because of the annual limitation of 50 percent of adjusted gross income for charitable contributions. The IRA charitable rollover is equivalent to a deduction because it is not included in taxable income.
Here are the steps to take to make a gift:
If you want to make a qualifying transfer, contact your IRA administrator and instruct that person to transfer funds to the Incarnate Word Academy Foundation.
Contact our office. We will answer your questions and provide instructions for completing your gift.
What our donors are saying...
“We know Pat would have been so proud of this living memorial in his name for the benefit of future students. Through this scholarship, IWA student recipients will be given the opportunity to flourish with a quality Catholic education, and like Pat, they too can stand tall.”
- Mary Catherine Rivers Pennington ‘50, Patrick (Pat) Rivers, CCCA’55 Scholarship
“I have established this scholarship as a tribute to my parents, who instilled in me the values of honesty and hard work. They strongly believed in Catholic education, and this is a small way of honoring the exceptional ideals they taught me.”
- Dr. Bob Bezdek, Henry and Anita Bezdek Scholarship
“I want to repay Incarnate Word Academy for its generosity to my parents and to thank and remember Sister Xavier for all she taught me. Being grateful for what God has given me and sharing that with others is one of the most important lessons I learned from Sister Xavier.”
- Jeanette E. Flusche Mullenix ‘54, Sr. Xavier Holworthy Scholarship
“As a tribute to Anyssa, I asked my friends to donate to the Anyssa Nicole Hinojosa Scholarship Fund in lieu of gifts for my 16th birthday celebration. I just had the idea; it was everyone who attended my party that made it possible. I was motivated by my mother’s advice, 'It is our responsibility to leave our community better than we found it.'”
- Madison Groesbeck ‘13, Anyssa Nicole Hinojosa Scholarship