After being first offered for the 2006 and 2007 tax years, the I.R.A. Charitable Rollover has been made permanent. This is much better news than in December 2014 when Congress extended the giving incentive for a less than generous 14 days.
On December 18, 2015, the President signed the Consolidated Appropriations Act, 2016 (H.R. 2029) which included the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The PATH Act made I.R.A. Rollovers to Charity available for the remainder of 2015 but also extended this planning opportunity indefinitely.
Here’s what you need to know:
- I.R.A. rollovers can only be done by I.R.A. owners who are 70 1/2 or older.
- The rollover must be made to a qualified public charity. (No, donor-advised funds are NOT qualified under the provisions. Pretty much every other charity is qualified.)
- The rollover is limited to $100,000 per year.
- The I.R.A. owner donor can split the $100,000 among multiple charities.
Just as in the past, the benefit to the donor is that the amount directly transferred to charity is not recognized as taxable income to the donor. The rollover also counts against the donor’s required minimum distribution from their traditional I.R.A. The donor does not receive a charitable income tax deduction for the rollover.
If you’re a donor and meet the qualifications above, consider using an IRA rollover gift each year to reduce your taxable income.
If you’re a development professional make sure to educate your more senior donors when you’re visiting with them about the benefit s and ease of IRA rollover gifts. This gives you an opportunity to serve them without an urgent ask. Also, make sure you include IRA rollovers when marketing gift opportunities throughout the year. If you don’t know where to start, we’re here to help!