Fri, December 18, 2015

Congress Reaches Agreement on Permanent Charitable IRA Rollover

The important benefits allows individuals age 70½ and older to donate excess retirement funds directly to charities, including colleges and universities, up to $100,000 annually

Here’s a special way to support Marywood if you are age 70 ½ or older.

The IRA Charitable Rollover was first enacted as part of the Pension Protection Act of 2006, extended through December 2014 in the Tax Increase Prevention Act of 2014, and has now been made permanent in the Tax Relief Act of 2015. You are now able to make a charitable gift directly from your IRA while excluding the amount of that gift from your adjusted gross income (AGI.)

Advantages to you:

  • You can use an overlooked asset to make a gift to Marywood.
  • The IRA Charitable Rollover permits you to make donations directly to charitable organizations such as Marywood from your IRA without counting the distribution as part of your AGI and, consequently, without paying taxes on it.
  • You don’t recognize the distribution as income for federal income tax purposes.
  • The distribution counts towards your minimum required distribution for the year.

To qualify:

  • You must be 70-1/2 or older and required to make an annual distribution from your IRA.
  • Your total combined charitable IRA rollover contribution cannot exceed $100,000 in any one year.
  • Charitable contributions from an IRA must go directly to a public charity that is not a supporting organization. Contributions to donor-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA rollover contributions.
  • 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. Distribution must be made directly from the IRA trustee payable to Marywood or another non-profit.
  • You cannot receive any goods or services in return for your charitable IRA rollover contribution in order to qualify for tax-free treatment. 

We recommend that you seek advice from your accountant prior to making a charitable rollover as personal circumstances can have a significant impact on whether charitable rollovers are advantageous. In order to benefit from a 2015-eligible IRA contribution, plan to contact your IRA administrator as soon as possible as some administrators may place a deadline on requesting transfers.

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