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IRA Charitable Rollover

With it being income tax season, I decided to cover a familiar subject. I’ve written in a previous blog about making the IRA Charitable Rollover permanently available. It took a little time to make it happen, but as of December 18, 2015, the IRA Charitable Rollover was passed by Congress and signed into permanent law by the President.

Making a contribution from your IRA to a fund at the Sonora Area Foundation is a smart way to reduce your tax burden and make a significant gift to support causes you care about. Each year, the IRS requires you to withdraw a certain amount (required minimum distribution) from your IRA whether you need the funds or not, and you pay income tax on every distribution you take.

The IRA Charitable Rollover has proven to be very popular with taxpayers and beneficial to charities. Despite its broad appeal, the provision remains limited in several respects. If you are 70 1/2 or older, you can make a gift from your IRA account to the Foundation. Gifts made from your IRA (up to $100,000 per year) are not reportable as taxable income and qualify toward your required minimum distribution which can lower your income and taxes. Best of all, it’s easy.

You can request an IRA rollover to almost any type of fund held by the Foundation, including general operating, field of interest, designated, agency, and scholarship funds. Please Note: Gifts to donor advised funds, private foundations, or to fund a Charitable Gift Annuity or Charitable Remainder Trust are addressed by special rules that you should first discuss with your IRA administrator. You cannot receive any goods or services in order for an IRA rollover gift to qualify for tax-free treatment.

There are numerous benefits to an IRA Charitable Rollover:

  • Pay fewer taxes
  • Reduce or eliminate required minimum distribution
  • Rollovers are not subject the 50% deductibility limit on cash gifts
  • Establish a designated fund or a memorial scholarship fund, contribute to an agency fund for one or more organizations, or support a field of interest fund, as examples.
  • Feel good knowing that you were able to make a major gift from your IRA.

Contact me at the Foundation office or your IRA administrator to see how you can do an IRA Charitable Rollover. Giving back to your community has never been so rewarding.