IRA Charitable Rollover

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IRA Charitable Rollover

Now it’s easier than ever to make the gift of a lifetime

IRAs can qualify for tax-free charitable distributions.

The Chautauqua Region Community Foundation can help turn your individual retirement accounts (IRAs) into tax-saving charitable gifts.

You can give more for less.

Thanks to recently passed legislation, American seniors can make the gift of a lifetime by giving their IRAs to charity without federal tax penalty. So your retirement funds can go further than ever before.

For years, estate planners have recommended that retirement assets may be the most tax-effective asset in larger estates to distribute to charity. These assets are not only vulnerable to heavy taxation as part of an estate but also can be taxed again as income in respect to a decedent on the tax returns of heirs.

Until now, there was a disincentive for retirees to give IRAs to charity during their lifetimes because withdrawals from IRAs were subject to income tax—even those given to charity.

Tax law.
Due to the signing of the American Taxpayer Relief Act on January 2, 2013 individuals 70 ½ years old and older, have a new opportunity to give back to the community. Individuals with a traditional IRA may “rollover” up to $100,000 to a charity and still receive a sizable tax advantage. If a qualified charitable distribution, of any amount, is made before January 31, 2013, it can count to satisfy all or part of their 2012 minimum required distribution.

While there is no added deduction for an IRA charitable rollover, avoiding up to $100,000 of taxable income may save substantial income taxes not otherwise available.

Who may want an IRA rollover? Charitable IRA rollovers will be popular for at least five reasons:

1. Convenience - It is a very simple and easy way to make a gift.

2. Standard Deduction Benefit - With an IRA charitable rollover, you may take the standard deduction. Since the IRA rollover is not on your return, it may reduce your taxes.

3. Lower Tax on Social Security - Because of an IRA distribution, you may be paying tax on 85% of your Social Security. Using the IRA charitable rollover may lower your income and only 50% of Social Security is taxable.

4. No Giving Limits - With an IRA charitable rollover, you may give more than the usual deductible amount of 50% of income.

There is so much more we’d like you to know. To learn more, contact Randy Sweeney, rsweeney@crcfonline.org or call (716) 661-3390.

DISCLAIMER
This information is based on our continuing analysis of the relevant legislation and regulations. We make every effort to ensure accuracy of this document. The information is not a substitute for expert legal, tax, or other professional advice, and we strongly encourage grantmakers and donors to work with counsel to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.