Published on April 28, 2016
By Gina Bortz
Director of Institutional Advancement at Phoebe Ministries
On Dec. 18, 2015, Congress passed the PATH Act, an bill that among other provisions contained a permanent extension of the IRA charitable rollover, which is great news for seniors in our community and the charities they support.
The IRA charitable rollover provision was created in the Pension Protection Act of 2006. Although it was enacted as a temporary charitable giving measure set to expire on December 31, 2007, it was extended many times over the years often at the last minute. The great news is that it is now permanent and it means no more waiting to see if it will be extended then rushing to complete the transaction after the extension approval. Now older adults can work with their financial planners, accountants and/or plan administrators to plan out their charitable giving.
The rules for the IRA charitable rollover are the same. You must be 70 ½ or older to qualify. It is a great way for you to make a gift to support the charities you care about while meeting your minimum distribution (RMD).
An IRA Rollover gift is a tax-exempt distribution made directly from your IRA to Phoebe or other qualified charity of your choice. Qualifying individuals can make charitable gifts using pre-tax IRA assets rather than taking distribution, paying income tax and using after-tax assets to make a charitable gift. The gift can be up to $100,000 and does not show up on your tax return as income. This helps higher-income donors avoid other tax consequences while also benefiting lower-income individuals who use the standard deduction because they choose not to itemize deductions.
To make an IRA charitable rollover gift, follow these important steps:
#1. Simply advise your IRA plan administrator that you intend to make an IRA charitable rollover gift.
#2. Ask them to send you the proper forms.
#3. Your IRA plan administrator will need you to send these forms back to them so they can complete the transfer from your IRA to Phoebe.
The IRA charitable rollover is a great way for many seniors to make a gift tax-free to Phoebe directly from their IRA now and in the foreseeable future. To see if the IRA charitable rollover is right for you, please contact your professional advisor(s).