- are 70-1/2 or older,
- have an Individual Retirement Account (IRA),
- do not depend upon your IRA required minimum distribution for living expenses,
- and wish to make a charitable donation before the end of the 2014 tax year,
the following information may be of interest to you.
On Tuesday, December 16, the Senate voted to extend the IRA charitable rollover for one year (2014). President Obama is expected to sign the bill within the next few days.
The provision allows individuals age 70½ or older to make tax-free gifts totaling up to $100,000 from a traditional IRA account directly to qualified charities, provided they are completed by December 31, 2014. If your spouse has IRA accounts, you may each make gifts of up to $100,000 from these accounts. While you cannot claim a charitable deduction for IRA gifts, this distribution from your IRA counts towards your minimum required distribution for the account and does NOT trigger income tax for you. It is a tax-free transfer from the IRA account directly to a charitable organization.
In order to complete an IRA Charitable Rollover for 2014, you will need to contact your IRA provider for exact instructions. Such transactions usually take a few weeks, but the provider should be able to fast-track such a transaction because Congress and the President acted so late this year.
While the IRA Charitable Rollover may not be the best tax-deduction mechanism for many donors (check with your financial advisor!), it may have benefits from an estate planning perspective. Retirement accounts are frequently bequeathed to heirs but are among the most highly-taxed assets of an individual’s estate. In some cases, they may even be subject to income tax. Therefore, directing all or a portion of your required minimum distribution for charitable giving may be a better choice if you are concerned about avoiding estate taxes.
If you are interested in making a charitable contribution by transfer of an IRA distribution, you must act quickly! The legislation expires December 31. If you do plan to complete an IRA Charitable Rollover for the San Juan Preservation Trust, please let us know so that we can look for it and thank you!
If you wish to read more about the IRA Charitable Rollover:
from the Wall Street Journal