IRA Charitable Rollover

In December 2015, Congress passed, and the President signed into law, the Protecting Americans from Tax Hikes (PATH) Act, which made permanent severale charitable tax incentives including the Individual Retirement Account (IRA) Charitable Rollover.

The IRA charitable rollover legislation enables you to transfer lifetime gifts up to $100,000 using funds from your individual retirement account (IRA) without undesirable tax effects.

You may contribute funds this way if:

  • You are age 70½ or older at the time of the gift.
  • You transfer up to $100,000 in tax-free contributions directly from your IRA.
  • You transfer the funds outright to one or more qualified charities.

Q. I’ve already named The Dallas Opera as the beneficiary of my IRA. What are the benefits of making my gift now?

A. By making a gift from your IRA now, you are jump-starting the legacy you would like to leave and giving yourself the joy of watching your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have already made by transferring that amount from your IRA under this legislation as long as it is $100,000 or less for the year.

Q. I’m turning age 70½ in a few months. Can I make this gift now?

A. No. The legislation requires you to reach age 70½ by the date you make the gift.

Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?

A. Yes. Direct rollovers to a qualified charity can only be made from a traditional or a Roth IRA. If you have a pension, profit sharing, or a 401(k) or 403(b) plan, you must first roll over all or part of that plan to an IRA. You can then use the funds from the IRA to complete the direct IRA rollover.

Q. Can my gift be used as my minimum required distribution under the law?

A. Yes. If you have not yet taken your required minimum distribution, the charitable IRA rollover gift can satisfy all or part of that requirement. Contact your IRA custodian to complete the gift.

Q. Do I need to give my entire IRA to be eligible for the tax benefits?

A. No. You can give any amount under this provision, as long as it is $100,000 or less this year.

Q. I have two charities I want to support. Can I give $100,000 from my IRA to each?

A. No. Under the law, you can give a maximum of $100,000. For example, you can give each organization $50,000 this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.

Q. My spouse and I would like to give more than $100,000. How can we do that?

A. If you have a spouse (as defined by the IRS) who is 70½ or older and who has an IRA, he or she can also give up to $100,000 from his or her IRA.

Don’t feel you can give $100,000? Your gift, no matter the size, matters to The Dallas Opera.

It is wise to consult with your tax professionals if you are contemplating a charitable gift with an IRA Charitable Rollover. Please feel free to contact Eva Toia at 214.443.1055 or with any questions you may have about making a gift with from your IRA.

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