IRA Charitable Rollover

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Fiscal Cliff Deal: A Special Tax Break for Charitable Older Adults

In the fiscal cliff bill, Congress revived and extended the Charitable IRA Rollover through 2013, with a brief window of opportunity for 2012 donations if you act before February 1, 2013. This tax break initially expired at the end of 2011, but has been extended as part of the fiscal cliff package.

To benefit from this special opportunity, the following qualifications must be met:

  • You must be age 70 ½ or older at the time of transfer.
  • The maximum amount you may transfer is $100,000 with respect to each year.
  • The gift must be outright. Gifts to donor advised funds or to life income vehicles do not qualify.
  • The gift must be transferred directly from your IRA account by the IRA administrator to Second Harvest Food Bank.

Contact your IRA provider to learn their procedures. We also offer sample letters you can send to your IRA provider to initiate a rollover.

 

Frequently Asked Questions

How do I know if an IRA charitable rollover is right for me?
  • 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
To what organizations can I make gifts?

Tax exempt organizations that are classified as 501(c)3 organizations, including Second Harvest Food Bank, to which deductible contributions can be made.

From what accounts can I make transfers?

Transfers must come from your IRA directly to Second Harvest Food Bank. If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to Second Harvest Food Bank.

What are the tax implications to me?

The federal government does not recognize the transfer to Second Harvest Food Bank as income, provided it goes directly from the IRA provider to Second Harvest Food Bank. However, you are not entitled to an income tax charitable deduction for your gift.

Does this transfer qualify as my minimum required distribution (RMD)?

Yes, the IRA charitable rollovers count towards your minimum required distributions for the year. Once you reach age 70½, you are required to take minimum distributions from your retirement plans each year. However, the RMD rules do not apply to Roth IRAs while the owner is alive.

I already took my distribution for 2012, is it too late to use it to make a charitable gift for 2012?

Under a special provision in the American Taxpayer Relief Act of 2012, if you took a distribution from your IRA in December, 2012, you can elect to treat all or part of it (up to the $100,000 threshold) as a gift to a charitable organization like Second Harvest Food Bank. You need to transfer it to the Food Bank in cash before February 1, 2013, and then make the appropriate election on your tax return once the Treasury provides instructions on how to do so.

Does the new law allow me to make a charitable gift from my IRA for 2012?

It does! You can elect to treat any transfer you make in January (up to the $100,000 threshold) as occurring in either 2012 or 2013. The Treasury still has to provide the Food Bank with instructions on how to make the election, but for now you simply transfer the funds as you would for any other IRA Charitable Rollover and make the election at the appropriate time. If you want, you can even transfer $200,000 in January, electing half for 2012 and the other half for 2013.

If you have any questions, please contact Tracey Thurston, Major Gifts Officer, at tthurston@shfb.org or 408-266-8866 ext. 436. Please also contact Tracey when you direct the rollover so we can look for the check from your IRA provider and ensure that you receive timely acknowledgment.

This information is intended to provide information of a general nature only and is not intended to provide legal, accounting, investment or other professional advice. Please consult your tax advisor for the latest tax and other relevant state and federal laws and regulations.

Second Harvest Food Bank's Tax ID Number: 94-2614101