IRA Charitable Rollover Gifts Permanently Extended
Use Traditional IRA to Make Charitable Gifts
- Must be age 70½ or older at the time of the gift.
- Transfers must be made directly from a traditional IRA account by the IRA administrator to Strawbery Banke Museum. Funds that are withdrawn by the individual and then contributed do NOT qualify. Gifts from 401k, 403b, SEP and other plans do not qualify.
- Gifts must be outright. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.
- It can total up to $100,000.
- Are not included in gross income for federal income tax purposes on IRS Form 1040 (no charitable deduction is available, however).
- Count towards required minimum distribution for the year
- Who qualifies?
Individuals who are age 70½ or older at the time of the contribution (have to wait until 6 months after 70th birthday to make the transfer).
- How much can one transfer?
$100,000 per year. The provision no longer has an expiration date.
- From what accounts can a transfer be made? Transfers must come from IRAs directly to Strawbery Banke Museum. If retirement assets are in a 401k, 403b, etc., these funds must first be rolled into an IRA, and then the IRA administrator can transfer the funds from the IRA directly to SBM.
- What charities qualify? Tax-exempt organizations that are classified as 501(c) (3) charities, including SBM, to which deductible contributions can be made.
- Can IRA Charitable Rollovers be used to fund life-income gifts (charitable gift annuities, charitable remainder trusts, or pooled income funds), donor-advised funds or supporting organizations? No, these are not eligible.
- How will SBM count the gift? Strawbery Banke will give the donor full credit for the entire gift amount.
- What are the tax implications?
- Federal — The transfer to SBM is not recognized as income, provided it goes directly from the IRA administrator to Strawbery Banke; therefore, the donor is not entitled to an income tax charitable deduction for the gift.
- State — Each state has different laws, so Strawbery Banke recommends consulting with an advisor. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still, other states have no income tax at all.
- Does this transfer qualify as the required minimum distribution? Once reaching the age of 70½, an individual is required to take required minimum distributions from retirement plans each year, according to a federal formula. IRA Charitable Rollovers count towards the minimum required distribution from the IRA for the year.
- Can a donor's spouse also make an IRA Charitable Rollover, even if married and file jointly? Yes, every individual can use the IRA Charitable Rollover for up to $100,000 each year.
- How do I know if an IRA Charitable Rollover is the right option? If one is at least age 70½, and
- does not need the additional income necessitated by the minimum required distribution, OR
- charitable gifts already equal 50% of one's adjusted gross income, so the is no benefit from an income tax charitable deduction for additional gifts, OR
- the donor does not itemize deductions, OR
- the donor is subject to income phase-outs on income tax deductions.
- What is the procedure to execute an IRA Charitable Rollover? It is a simple process of alerting SBM and the administrator of the IRA plan. The museum offers our sample letter (to the administrator) that can be sent to initiate the rollover. Please contact Joe April, Director of Development using this sample letter!