H.R. 2029, the Protecting Americans from Tax Hikes Act of 2015 has permanently extended the IRA Charitable Rollover. Originally passed in 2006 as part of the Pension Protection Act, 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) charities, without having to count the transfers as income for federal income tax purposes.
Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½th birthday to make the transfer).
How much can I transfer?
$100,000 per year. The provision no longer has an expiration date.
From what accounts can I make transfers?
Transfers must come from your IRAs directly to Fordham Prep. If you have retirement assets in a 401k, 403b etc., you must first roll those funds into an IRA, and then you can direct the IRA administrator to transfer the funds from the IRA directly to Fordham Prep.
To what charities can I make gifts?
Tax exempt organizations that are classified as 501(c)(3) charities, including Fordham Prep, to which deductible contributions can be made.
Can I use the IRA Charitable 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 IRA Charitable Rollover to support endowment?
Yes, all IRA Charitable Rollover gifts can be used to support this important need.
How will Fordham Prep 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 Fordham Prep as income, provided it goes directly from the IRA administrator 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 toward 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 distribution from the IRA for the year.
Can my spouse also make an IRA Charitable Rollover, even if we are married and file jointly?
Yes, every individual can use the IRA Charitable Rollover for up to $100,000 each year.
How do I know if an IRA Charitable Rollover is right for me?
You are at least age 70½, and:
You do not need the additional income necessitated by your minimum required distribution,
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,
You do not itemize deductions,
You are subject to income phase-outs on your income tax deductions.
What is the procedure to execute an IRA Charitable Rollover?
For more information, please contact Jose R. Gonzalez, Vice President for Engagement, Development & Communications at 718-367-7500, ext. 210 or via email at firstname.lastname@example.org – Fax: 718-367-7598.
Neither Fordham Prep nor its employees and related parties provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion or strategy including any estate planning strategies, before you implement. In addition, the information is current as of the date indicated and is subject to change without notice.