The IRA Charitable Rollover extension passed Congress and was signed into law by the President on December 18, 2015. It provides a permanent extension, retroactive to January 1, 2015, with no new expiration date. The following explains the details of the law and provides you with some advice to help market and facilitate gifts.
The IRA Charitable Rollover has proven a popular way for donors to support their favorite causes, for the main reason that it enables donors to make a gift to charity from their IRAs and not include the amount distributed in their taxable income. Beyond making it easier to make gifts from their IRA, the charitable rollover can be advantageous to donors from a tax standpoint if:
- They do not itemize deductions.
- They pay state income tax but cannot take charitable deductions on their state return.
- They would not be able to deduct all of their charitable contributions because of deduction limitations, or
- An increase in taxable income would negatively affect their ability to use other deductions.
The extension keeps in place all of the previous requirements in order for the transfer to qualify:
- The 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 total for a couple with separate IRAs) in a given year,
- They can only be outright gifts (can’t fund a CGA or charitable trust),
- No goods or services can be given in exchange, and
- The gifts cannot be made to a donor advised fund, a supporting organization, or a private foundation.
Some donors may have made qualifying gifts in 2015 in the hope that the provision would be extended retroactive to the beginning of 2015. This is what has happened. For these donors, you need to make sure that they get a receipt acknowledging that the transfer was a qualified charitable distribution according to the law’s requirements.
In the immediate short-term, you could be in touch with all of your donors who have made IRA rollover gifts previously or who you know are interested in making an IRA rollover gift for the first time. In addition, an e-mail blast to donors who are age 70 and older would be an excellent way to share the message. Note that a charitable rollover needs to be completed by December 31, 2015 to qualify for 2015.
As the IRA Charitable Rollover now has no expiration date, donors will have the ability to plan their IRA required minimum distributions for 2016 and future years with the knowledge that the IRA Charitable Rollover is available. This is great news for the non-profit community and its donors!
If you have any questions, please contact PG Calc at support@pgcalc.com or call PG Calc Client Services at 888-474-2252 for assistance.
