Giving Through an IRA Rollover
70 1/2 or Older? IRA Charitable Rollover is now PERMANENT!
- The Protecting Americans from Tax Hikes (PATH) Act of 2015, which was passed by Congress and signed into law by the president on December 18, 2015, made permanent what is popularly known as the IRA charitable rollover.
If you are 70½ or older and have an IRA—you may want to consider making a qualified charitable distribution from your IRA directly to the Bulletin of the Atomic Scientists. PLEASE NOTE: Beginning in January 2020 the age at which you are required to take a distribution from your IRA has increased from 70½ to 72 (although you are still able to make a tax-free transfer beginning at age 70½). ALSO NOTE: Under the CARES Act in calendar year 2020 there is no required minimum distribution from your IRA—no matter the age of the account holder. Please consult your tax advisor to determine if this type of gift is right for you.
Here are the requirements and restrictions for making an IRA charitable rollover gift:
- The donor must be 70 1/2 or older.
- The gift must be made directly from the IRA to an eligible charitable organization.
- Gifts to all charities combined cannot exceed a total of $100,000 per taxpayer for the year.
- The gifts must be outright, and no material benefits can be received in return for the gifts. Thus a transfer for a gift annuity, charitable remainder trust, or pooled income fund is not permitted.
- Gifts cannot be made to a donor advised fund, supporting organization, or private foundation.
- The gift is not included in taxable income, and no charitable deduction is allowed.
- The gift can be made only from an IRA. Gifts from 401(k), 403(b), and 457 plans are not permitted.
- The qualified distribution described above applies to a traditional IRA.
- Distributions from employer-sponsored retirement plans, including simple IRA plans and simplified employee pension (SEP) plans, are not eligible for the tax-free rollover
If you want to make a qualifying transfer, contact your IRA administrator and instruct that person to transfer funds to the charity(ies) you designate. We provide instructions for completing your gift – contact our Development Director Colleen McElligott, [email protected] or 773.834.2308.
2020 Cares Act - Charitable Giving Incentives
On Friday, March 27, 2020, the Congress passed and the President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic stimulus package legislated to provide immediate relief for nonprofits, businesses, individuals and state and local governments.
CARES Act Charitable Deduction for Non-Itemizers
If you choose to take the standard deduction instead of itemizing your taxes, the CARES Act will allow you to claim a charitable deduction up to $300 for cash donations made in 2020. This tax incentive is available only to people who take the standard deduction and make cash gifts to qualified charities. A donation to a donor-advised fund does not qualify for this new deduction.
The Cares Act also provides Charitable Giving Incentives in 2020:
- This law provides a new $300 above-the-line charitable contribution deduction for individual taxpayers who take the standard deduction. They may donate up to $300 cash to the Bulletin of the Atomic Scientists, with a corresponding reduction in taxable income. The incentive applies to cash contributions made in 2020 and can be claimed on tax forms next year. (Section 2204).
- The law also lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent.
- For corporations, the law raises the annual limit from 10 percent to 25 percent. Food donations from corporations would be available to 25 percent, up from the current 15 percent cap. (Section 2205).
Please consult your tax advisor to determine if this deduction is right for you. The above information is provided for general guidance and does not constitute legal or tax advice for any specific individual or organization.
For assistance with your gift contact our Gift Officer at [email protected] or 773.834.2308.