IRA Charitable Rollover

What is it?

A way to make a charitable gift using IRA assets without triggering taxable income. Donors age 70½ or older may make a direct, tax-free, non-deductible rollover of up to $100,000 from an IRA to a qualified charitable organization.

When is it used?

You can make a withdrawal from an IRA and then give the money to a charity and receive a charitable deduction, but doing so may have adverse tax consequences. The IRA Charitable Distribution, usually referred to as an “IRA Rollover” provides the following benefits:

• Taxpayers who normally don’t itemize will get the equivalent of a charitable deduction for their gift.
• Taxpayers who are near the adjusted gross income ceiling on charitable deductions (i.e., the 30% and 50% rules) can still make a charitable IRA rollover, which will act like a full charitable deduction for their gift.
• Donors who have carryover deductions from earlier donations won't lose the ability to take them in the year of the rollover.
• Donors may avoid tax deduction reductions based on income levels (i.e., 7.5% floor on medical deductions.)
• A charitable IRA rollover, as opposed to a taxable withdrawal by the taxpayer, may reduce the amount of social security payments subject to tax.

How does it work?

1. It may only be made on or after the date that the IRA owner attained age 70½.
2. The distribution must be from an IRA. Other qualified retirement assets may be rolled into an IRA and the gift may then be made from the IRA.
3. The check must be issued directly payable to the charity.
4. The donor may not receive any personal financial benefit, such as tickets, dinners, auction purchases, memberships, etc.
5. An IRA Rollover only applies to the taxable portion of an IRA.
6. The charity must issue a contemporaneous written acknowledgment that describes the amount contributed and certifies that the donor did not receive any financial benefits in exchange for the gift.
7. The recipient organization must be a public charity or a private operating foundation. Gifts to Donor Advised Funds, Supporting Organizations and private foundations do not qualify, but gifts to the following kinds of funds at The Minneapolis Foundation qualify:

• Community Improvement Fund (Unrestricted)
• Designated Beneficiary Fund (To support one or more nonprofits)
  
• Field of Interest Fund
• Legacy Funds (income from Legacy Funds is pooled to provide support for specific fields of interest): Community Endowment; Animal Welfare; Arts and Culture; Children & Youth; Justice & Equality; Education Environment; Health; Housing & Human Services; Immigrants & Refugees; International Development & Relief; Justice, Equality, and Civic Engagement; Senior Services.
  
• Customized Fund: We’re happy to work with you to establish a unique charitable fund that accomplishes your financial and philanthropic goals.

Get Started

We’re happy to help you find the charitable giving or estate planning option that works best for your situation. We can work directly with you or through your philanthropic advisor. Call us today at (612) 672-3859.