IRA Charitable IRA Rollover Giving Provision Reinstated Permanently!
Friday, December 18, 2015 President Obama signed legislation into law, which included among many items, the long-sought after IRA Charitable Giving provision. However, this time around, the Charitable IRA Rollover provision is permanent!
The law allows you to make direct gifts to qualified charities, such as Crowley’s Ridge College from your IRA with no tax consequence. If you haven’t taken your Required Minimum Distributions (RMD) yet this year, an IRA rollover gift counts towards your RMD.
Some of the benefits of a Charitable IRA Rollover include:
You can reduce your taxable income.
The donation counts toward your annual required minimum distribution.
Donors must be at least 70 ½ years of age on the date of the gift.
Up to $100,000 per person may be transferred during each calendar year from the donor’s IRA or IRAs.
The Charitable IRA Rollover only applies for gifts from an IRA and not from any other type of retirement plan (e.g. 401(k), 403(b), SEP, etc.). In some cases, a donor may transfer assets from another type of retirement account into an IRA in order to be able to make a tax-free IRA rollover to a charity.
It is only allowed for outright gifts to a qualified public charity such as Crowley’s Ridge College for which the donor receives no benefits. It is not allowed for transfers to a charitable remainder trust, lead trust, gift annuity, pooled income fund, donor advised fund, supporting organization, family foundation, etc.
There is no federal income realized and no income tax deduction for the donor making a Charitable IRA Rollover.
A Charitable IRA Rollover does not result in higher adjusted gross income and it may eliminate the negative impact of higher income on existing charitable deductions and help in other areas related to Medicare premiums, self-employment and Social Security taxes and other Affordable Care Act taxes and penalties.
Some states treat the Charitable IRA Rollover as income followed by a deduction and apply a state income tax treatment, but this varies state to state, so please check with your financial and/or tax advisors.
- The Charitable IRA Rollover must be directly transferred from the plan administrator of the IRA to a qualified charity such as Crowley’s Ridge College. The donor should not accept any distribution of funds intended for a Charitable IRA Rollover.
A testamentary gift of an IRA to Crowley’s Ridge College may be more appropriate for those donors who do not have sufficient assets to comfortably consider a lifetime Charitable IRA Rollover. This can be done by naming Crowley’s Ridge College as a primary or contingent beneficiary of the IRA on a Beneficiary Designation Form available from the IRA’s plan administrator.
You can also download a sample letter to send to your plan administrator to direct a qualified charitable distribution from an IRA to Crowley’s Ridge College. Click on this link: Sample Letter to send to your IRA Administrator
Attn: Richard Johnson, Vice President for Advancement
Crowley’s Ridge College
100 College Drive
Paragould, AR 72450
Phone: (870) 236-6901