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: Required minimum distributions (RMDs) must be taken each year beginning with the year you turn age 72 (70 ½ if you turn 70 ½ in 2019). 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 - to speak directly with our gift officer, please contact Colleen McElligott at [email protected] or (773) 834-2308.

How the Cares Act extensions affect your 2021 charitable tax deductions

As a result of the most recent stimulus package, the Consolidated Appropriations Act, 2021, a couple of CARES Act provisions were extended (or increased, in one provision) into 2021 as described below.

Extension and expansion of the above-the-line charitable deduction

  • The $300 above-the-line charitable deduction has been extended for single filers who do not itemize deductions.
  • For 2021, this above-the-line deduction is increased to $600 for married couples filing jointly who do not itemize tax deductions.
  • As in 2020, this deduction applies only to qualified cash contributions and does not apply to cash contributions made to private foundations, donor advised funds or supporting organizations, or to split interest trusts like charitable remainder and lead trusts. It also does not apply to carry-over contributions.

Extension of the charitable contribution limitation

  • The temporary suspension of the 60 percent charitable contribution deduction limitation has been extended into 2021 for qualified cash contributions.
  • In 2021, individual taxpayers who itemize tax deductions and who contribute cash to a public charity, or a limited number of private foundations, may deduct up to 100 percent of their adjusted gross income after taking into account other contributions subject to charitable contribution limitations.
  • Individual taxpayers can continue to carry forward any excess charitable contributions for five years, but the enhanced 100 percent deduction limitation expires after 2021.
  • In 2021, corporations may continue to deduct charitable gifts up to 25 percent of the corporation’s taxable income (increased from 10 percent).
  • The CARES Act suspension of the required minimum distribution from most retirement plans for 2020 does not appear to have been extended into 2021.

Please note that the above applies to federal taxes only; state law may vary.

For more information about how the extension of these CARES Act provisions may impact your specific financial situation, please consult with your tax, legal, or financial advisor(s). To speak directly with our gift officer, please contact Colleen McElligott at [email protected] or (773) 834-2308.