Thank you for considering a contribution to Boys & Girls Clubs of Monterey County!
In 2015 a permanent tax provision was approved that allows IRA holders to make distributions directly to charity. This special gift option allows donors to make an immediate difference in the lives of children and youth, while avoiding income taxes on the amount gifted.
Summary: The IRA rollover allows donors 70½ or older to transfer up to $100,000 directly from their IRA to charity each year. An IRA rollover gift is a tax-exempt distribution. Qualifying individuals can make charitable gifts using pre-tax IRA assets. This allows them to avoid taking an unwanted taxable distribution. An IRA rollover gift can be used to meet all or part of an IRA required minimum distribution.
Please note that this provision only applies to traditional IRA or Roth IRA accounts not 401K or 403B or other retirement accounts. If you have one of those accounts, you would first need to roll it over into an IRA and then make the distribution directly to the charity.
Know the Rules:
- Donors must be 70½ or older at date of contribution
- The money must be distributed directly to the Club (the donor should not take the money out and then give it through a personal check or credit card)
- The maximum contribution allowed per donor is $100,000 per year
- A rollover gift can be used to meet all or part of an IRA required minimum distribution
- The rollover is not eligible for a charitable tax deduction; however the transferred asset is not taxable, thus reducing the donor’s taxable income
- The rollover cannot be used to fund a deferred gift plan (such as a charitable remainder trust or charitable gift annuity)
What is an IRA charitable rollover?
An IRA charitable rollover is a distribution from an IRA holder who 70 ½ or older to an eligible charitable organization. An individual may exclude up to $100,000 from his/her gross income that would have been taxable from the required distribution.
Who might consider an IRA charitable rollover?
- Donors whose charitable deductions are maxed out
- Donors facing minimum distribution requirements
- Some high-income donors subject to Alternative Minimum Tax
- Donors in states that do not allow charitable deductions
What are the benefits to the donor?
- Allows the donor to make a pre-tax gift to the donor’s favorite charity
- Fulfills the donor’s minimum required distribution
- Reduces the donor’s gross taxable income