Make your charitable IRA rollover by December 31

December 6, 2013 | Jewish Federation of Metropolitan Detroit

The IRA Charitable Rollover was extended through December 31, 2013, as a provision of the American Taxpayer Relief Act of 2012. The IRA Charitable Rollover allows individuals age 70½ and older to make direct transfers totaling up to $100,000 per year to 501(c)(3) organizations, without having to count the transfers as income for federal income tax purposes.

  • Who qualifies? Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½ birthdate to make the transfer).
  • How much can I transfer? $100,000 per year.
  • From what accounts can I make transfers? Transfers must come from your IRAs directly to Jewish Federation of Metropolitan Detroit. If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you direct the IRA provider to transfer the funds from the IRA directly to Jewish Federation of Metropolitan Detroit.
  • To what organizations can I make gifts? Tax exempt organizations that are classified as 501(c)(3) organizations, including Jewish Federation of Metropolitan Detroit, to which deductible contributions can be made.
  • Can I use the rollover to fund life-income gifts (charitable gift annuities, charitable remainder trusts, or pooled income funds), donor advised funds, or supporting organizations? No, these are not eligible.
  • Can I use the rollover to support a particular purpose of Jewish Federation of Metropolitan Detroit? As with all other gifts, you can direct your IRA Charitable Rollover gift as you see fit. However, you cannot direct your gift for a purpose from which you receive a personal benefit, goods, or services in return, such as a gala ticket, to purchase items at a silent auction, etc.
  • How will Jewish Federation of Metropolitan Detroit count the gift? We will give you full credit for the entire gift amount.
  • What are the tax implications to me?
    • Federal — You do not recognize the transfer to Jewish Federation of Metropolitan Detroit as income, provided it goes directly from the IRA provider to us. However, you are not entitled to an income tax charitable deduction for your gift.
    • State — Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still other states have no income tax at all.
  • Does this transfer qualify as my minimum required distribution? Once you reach age 70½, you are required to take minimum distributions from your retirement plans each year, according to a federal formula. IRA charitable rollovers count towards your minimum required distributions for the year.
  • How do I know if an IRA charitable rollover is right for me? An IRA charitable rollover could be advantageous for you if:
    • You are at least age 70½, AND
    • You do not need the additional income necessitated by the minimum required distribution, OR
    • Your charitable gifts already equal 50% of your adjusted gross income, so you do not benefit from an income tax charitable deduction for additional gifts, OR
    • You do not itemize deductions, OR
    • You are subject to income tax deduction and exemption phase outs
  • What is the procedure to execute an IRA charitable rollover? To complete an IRA charitable rollover, the first step is to contact your IRA provider to learn their procedures. We also offer a sample letter (see below) that you can send to your IRA provider to initiate a rollover. Some firms may require their own forms. Make sure you contact us when you direct the rollover so we can look for the check from your IRA provider.

» For more information on Federation’s planned giving programs, click here.

» To discuss your options for a charitable rollover please eMail Stacey Deweese.

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