IRA Charitable Rollover Gifts Permanently Extended
Use Traditional IRA to Make Charitable Gifts

The IRA Charitable Rollover provides an excellent opportunity to make a gift from an asset that would be subject to multiple levels of taxation if it remained in one's taxable estate.
To qualify:
  • 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 Funds that are withdrawn by the individual and then contributed do NOT qualify.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.
Benefits — qualified charitable distributions:
  • 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
Suppose Jane wants to make a contribution to SBM. She has $500,000 in her IRA and she wants the contribution to be $100,000. She can authorize the administrator of her IRA to transfer $100,000 to SBM and $400,000 to herself. The $100,000 distributed to SBM will not be subject to federal tax and will be counted toward her annual minimum required distribution.
When planning required minimum distributions for this year if the money the government is requiring is not needed, please consider using it for a charitable gift using the IRA Charitable Rollover.
Questions and Answers
H.R. 2029, the Protecting Americans from Tax Hikes Act of 2015 permanently extended the IRA Charitable Rollover. Originally passed in 2006 as part of the Pension Protection Act, the IRA Charitable Rollover allows individuals age 70½ and older to make direct transfers totaling up to $100,000 per year to 501(c)(3) charities, without having to count the transfers as income for federal income tax purposes.
  • 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!