The IRA Charitable Rollover has been made permanent.
The advantage is that if you are charitable, and if you have an IRA, you can direct up to $100,000 annually to charities without having to recognize those gifts as income. If you don’t need the income from your IRA annually for living expenses but are subject to the Required Minimum Distribution, AND are charitable, this becomes a particularly attractive option to reduce taxes. The tax advantages for you may include:
- You may avoid being bumped into a higher federal and/or state income tax bracket.
- You can prevent hitting the phase-outs on your deductions and personal exemptions.
- You may be able to keep from falling into the Alternative Minimum Tax.
- You may avoid incurring the Affordable Care Act tax.
You may also benefit if you don’t itemize deductions. Because a rollover gift can reduce your income and taxes, you can still benefit from charitable giving even as a non-itemizer.
The rule requires that you make distributions directly to charity, and further restricts distributions from going to a private foundation, donor advised fund, or to a split-interest gift such as a charitable trust or gift annuity. At the Community Foundation, we work with a few donors who make gifts to us with their IRA, with designated charity recipients. Using this method we can receive IRA distributions for many purposes such as scholarships, multi-year grants, designated endowments, etc.
In past years, the biggest problem was that Congress didn’t pass along legislation early enough in the year for people to take advantage of this method of giving. So having the IRS Rollover made permanent is a great relief to many.
The Community Foundation of Western Nevada has experience in this area and we’re glad to help. If you’d like to learn more, or if you would like to join the Community Foundation in our work, please give me a call.
Chris Askin, President & CEO.
775-762-1932.
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