Thanks to last minute legislation, the IRA charitable rollover is available through December 31, 2014 (so there is not much time to do this and have it qualify for 2014). Donors age 70 1/2 and older may transfer up to $100,000 from their IRA to a qualified public charity. The transfer will be made free of federal income tax and the gift qualifies for the donor’s 2014 required minimum distribution (RMD).
The rollover is not permitted to a donor advised fund, a Charitable Remainder Trust or Charitable Gift Annuity.
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Each year, IRA owners age 70½ and older must take a required minimum distribution (RMD). The distributions generally commence at age 71 and must be taken by the recipient no later than 12/31 each year. The IRA charitable rollover is limited to $100,000 and qualifies as a RMD. Normally, the RMD is treated as income to the recipient. When given directly to charity under this law, the rollover is not counted towards the person’s income but does not qualify for a charitable deduction. If the IRA recipient does not need the income, giving it away to charity reduces the person’s overall income tax burden and allows him/ her to benefit charity.
The person wishing to make the rollover contribution must go through the IRA custodian who is administering the IRA. Most IRA custodians have forms on their websites that will permit the distribution to be made to the charity. Again, the extension is only for 2014 so to qualify the IRA rollover amount would need to be gifted by 12/31/14.
Note: This is not intended as legal or tax advice. Please consult your legal or tax advisor before making any gift or recommending any gift to a donor or organization.