A Year End Reminder for the IRA Charitable Rollover

As December 31, 2013, approaches it is worth reminding donors that the American Taxpayer Relief Act of 2012 (H.R. 8), passed this past January, extended the IRA Charitable Rollover provision which permits individuals to make a “qualified charitable distribution” to an eligible charitable organization without recognizing the amount of the distribution as income.   Here are the specifics:

  • Donor must be at least 70 ½ years of age when the gift is made,
  • Transfer must be made directly from the IRA administrator to the charity,
  • The gifts from the IRA cannot exceed $100,000 per person ($200,000 for a couple) in a given year,
  • They can only be outright gifts (can’t fund a CGA or charitable trust),
  • No goods and services can be given in exchange, and
  • Cannot be made to a donor advised fund or a supporting organization.

This can be very advantageous to many donors.  Specifically, the Rollover provision helps donors who:

  • Do not itemize deductions,
  • Pay state income tax but cannot take charitable deductions on their state return,
  • Itemize deductions, but would not be able to deduct all of their charitable contributions because of deduction limitations, or
  • Itemize deductions and have an increase in taxable income that may negatively impact their ability to use other deductions.

As you talk with your donors or communicate with them via direct response, remind them of this option by giving specific examples of projects/priorities your institution has and how their giving can support one of these priorities and also benefit them.  For instance:

“Jim and Julie Silver, each 71 years old, are long-time supporters of the College of Education at your institution.  Recently, they have enjoyed learning more about the College’s aim to implement a new teacher-training program which holds the promise to increase substantially the high school graduation rate by the year 2020.  They view this issue as one of the most pressing facing our country.  They would like to make a gift to support the construction of the new College of Education facility and the training/research labs needed for this new program.  They have decided to support this key project by having their financial planner transfer $80,000 for each of the IRAs.  This gift of $160,000 will not be subject to the usual tax associated with regular withdrawals from their IRAs.”

Good luck in encouraging your donors to give their very best gifts during this Season of Giving!

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