The Pension Protection Act of 2006 (PPA) permitted individuals to roll over up to $100,000 from an individual retirement account (IRA) directly to a qualifying charity without recognizing the assets transferred to the qualifying charity as income. While this initial provision expired on December 31, 2007, it has been extended several times. On December 18, 2015 the President signed the PATH Act making this special provision permanent.
What is an IRA Charitable Rollover? The law uses the term “qualified charitable distribution” to describe an IRA charitable rollover. A qualified charitable distribution is money that individuals who are 70½ or older may direct from their traditional IRA to eligible charitable organizations. The provision has a cap of $100,000 for charitable distributions from individual IRAs each year. Individuals may exclude the amount distributed directly to an eligible charity from their gross income.
Here are the basic rules to utilize this giving option:
- You must be age 70.5 and older.
- You can directly transfer up to $100,000 to any 501(c)(3) public charity(s) in a given calendar year (no private foundations or donor advised funds or any donor benefit such as gala tickets).
- Your gift will not be treated as a taxable IRA withdrawal …making these gifts especially attractive if you need to meet Required Minimum Distributions but don’t need the income.
- The check must go directly from your IRA plan administrator to FLT.
- Since the IRA funds are not being taxed, it is the equivalent of a full income tax deduction – which is especially valuable for non-itemizers. (Note: you can not take an income tax deduction for this gift on your tax returns – the avoidance of tax on IRA funds is fully equivalent to an income tax deduction and more).
Go to http://www.cof.org/content/analysis-ira-charitable-rollover-extension for more information.
For more information or to discuss your legacy gift plans with FLT, contact Paul Travis at:
406-752-8293 or [email protected]