Resources for: Donors

IRA Rollover Gifts

IRA Rollover Gifts

At last, federal legislation was passed at the end of 2015 making the IRA direct charitable rollover gift option permanent.  Now, each year, persons over age 70 ½ may make gifts to charity directly from individual retirement accounts (IRAs) without including the distribution as personal income, but counting the gift toward the required minimum distribution.  These “qualified charitable contributions” (QCDs – i.e., those issued directly from the IRA administrator to the charity) are available as follows:

Key Points:

  • •   You must be at least age 70 ½ when the gift rollover distribution is made.
  • •   The law applies only to IRA accounts (either Traditional or Roth). Other plans such as 401(k) or 403(b) plans do not qualify.
  • •   The QCD(s) must be made directly from your IRA administrator to your church, UM organization or other favorite charity. (For those with check writing privileges on their IRA accounts, this may be the most efficient way to make gifts directly from an IRA.) 
  • •   Total IRA rollover gifts are limited to $100,000 per taxpayer per year. If married and each spouse has an IRA, then each may gift up to $100,000 per year.
  • •   The gift counts toward your IRA required minimum annual distribution (RMD).
  • •   The gift distribution is excluded from your income for both federal and Missouri state income tax purposes. Although you cannot deduct the gift on your income tax return, the distribution is not reported as income so there is no adverse income tax effect.
  • •   Your QCD may not be used to contribute to a private foundation, donor advised fund, supporting organization, a charitable gift annuity or a charitable remainder trust.
  • •   (Note: The distribution will not qualify under this legislation if the IRA owner receives the distribution and then writes a check to the charity. Such distributions are income to the owner, and the owner may then claim an itemized charitable deduction for the gift.)
  • •   Be sure to request a proper gift receipt from your church or charity. (The Foundation has a sample church IRA gift receipt on its website.)

This gift provision is included in legislation titled “The Protecting Americans from Tax Hikes Act of 2015” which simply renewed the provisions already found in the Internal Revenue Code Section 408(d)(8).  The forgoing outline is provided for informational purposes only and is not intended as financial, tax or legal advice.  Individuals will want to discuss this with their own professional advisors and IRA administrators.  (Donors and church administrators may contact the Foundation for assistance and information at 800-332-8238 and/or download sample materials below)

 

Donor Sample IRA Distribution Request letter Donor Sample IRA Distribution Request ltr – Word version

To view information about Qualified Charitable Distributions from an IRA as posted on the IRS website, please follow this link:  www.irs.gov/QCDinfo