If you haven’t already heard, the opportunity for donors to support your cause and reduce their taxes through an IRA charitable rollover has been made permanent for 2016 and retroactive for 2015.
Not familiar with the IRA charitable rollover legislation?
Here’s what you need to know:
- Only donors age 70 1/2 or older may participate.
- Eligible donors may make a donation to a public charity directly from his/her Individual Retirement Account (IRA).
- Up to $100,000 in IRA assets can be transferred per year.
- Transferred/donated IRA assets will not be taxed as income to the donor AND donors will receive a tax deduction for the transferred/donated assets. (Note: varying federal and state tax rules may prevent donation deductions from fully offsetting a donor’s taxable income. Please encourage your donors to seek guidance for their specific tax requirements from a trusted advisor.)
This is an ideal opportunity for someone who has planned well for retirement and does not need the required payout from his/her retirement account for living expenses and, in fact, would prefer to avoid receiving the payout payment and paying income taxes for it. Such donors can simply transfer the payout payment to your charity and receive a charitable donation receipt that may further reduce the taxes s/he will pay for other social security and retirement income s/he may be receiving. It’s a win-win!
For the past few years, Congress has decided each year that it would allow donors to make IRA charitable rollover gifts. Now, the opportunity is law and will remain permanent (unless amended at a future date) Start educating your eligible donors about this opportunity now and remember to remind them in your end-of-the year appeals next winter. It’s a great pain-free opportunity for your donors to be be even greater philanthropists and heroes in their communities!
The process for completing an IRA charitable rollover is simple and straightforward. More specific information about the legislation can be found here. Encourage your donors to start their process by contacting their IRA administrator and/or accountant. Start your conversation with your donors using these handy “Talking Tips.”