Consider an IRA Charitable Rollover

IF YOU:

  • are 70-1/2 or older,
  • have an Individual Retirement Account (IRA), and
  • do not depend upon your required minimum distribution from your IRA for living expenses,

the following information may be of interest to you.

In late 2015, the President signed into law the permanent authorization of the IRA charitable rollover. 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. 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, you need to direct your IRA plan administrator to transfer assets directly to the charitable organization you wish to support. Click here for sample instructions to send to your IRA plan administrator.

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 one’s required minimum distribution for charitable giving may be a better choice if a donor is concerned about avoiding estate taxes.