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IRA Charitable Rollover Provision Extended

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The Protecting Americans from Tax Hikes (PATH) Act of 2015 has permanently extended the benefits of the IRA charitable rollover provision. These benefits are retroactive to January 1, 2015.

From now on, taxpayers 70 1/2 or older can make an IRA transfer of up to $100,000 directly to charity and claim it as a tax-free IRA Charitable Rollover gift.

To qualify as an IRA Charitable Rollover gift, donors must meet several conditions:

  • The IRA account holder must be at least age 70 1/2 at the time the distribution is made to charity.
  • The IRA distribution must be made as an outright gift (not to exceed $100,000) and must be made directly from the IRA custodian to the charity.
  • Distributions cannot be used to fund a gift annuity or charitable remainder unitrust, and can only be directed from a traditional IRA or Roth IRA (not from a retirement plan such as a 401(k), 403(b), etc.).
  • Distributions cannot be made to a donor advised fund or supporting organization (including most private foundations).
  • No goods or services can be received by the donor in exchange for the gift.
  • The provision provides a meaningful opportunity for individuals 70 1/2 or older who must take minimum IRA distributions but do not need the additional income
  • Those who wish to make charitable gifts in excess of 50 percent of their adjusted gross income (AGI)
  • Nonitemizers
  • Individuals in states that do not allow charitable deductions
  • Anyone who has considered using IRA assets to make a gift to the University

If a donor made a gift from his or her IRA on or after January 1, 2015, that meets the requirements of an IRA charitable rollover, then the amount distributed from the IRA to the charity qualifies as a tax-free distribution and will not be included in AGI, which prevents that amount from adversely affecting calculations that are based on AGI, such as the 3.8 percent Medicare surtax.

Donors should work directly with their IRA custodian to request a distribution directly to charity. Please consult your tax adviser and reference the above, as other requirements may apply.

Click here to download instructions and a sample distribution request letter. If you need more information, or if you are preparing to make a direct wire transfer charitable gift from your IRA, please contact our office at 973.736.1800 or by email to [email protected]

If you wish to make sure that the contribution is treated as made in 2015 to count against your 2015 minimum required distribution, your mailing must be postmarked by December 31, 2015, or the wire initiated on or before December 31, 2015.

This information should not be treated as professional legal or tax advice and is provided for informational purposes only. Consult with your own accountant or attorney about how the tax laws apply to you.

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