What Is an IRA Rollover?
In 2015, after years of last-minute temporary renewals, Congress finally passed legislation allowing people age 70 1/2 or older to make donations to charitable organizations directly from their IRAs, without first claiming the IRA distribution as taxable income. Called a “Charitable Rollover,” or a “Qualified Charitable Distribution,” the advantage of making the direct transfer from an IRA to an organization like FWCC
is that the distribution doesn’t have to be counted as part of your adjusted gross income (AGI) and subsequently deducted as a charitable gift. A lower AGI means that you don’t risk paying a Medicare high-income surcharge, and could also mean that less of your Social Security benefits are taxable. And with a charitable rollover you don’t need to itemize your deductions to get a tax benefit from your gift, since the distribution isn’t counted as income and subject to income tax.
There are some important rules to keep in mind regarding the IRA Charitable Rollover, however. You must be at least 70 1/2 at the time of the transfer, and you cannot transfer more than $100,000 tax-free each year. Distributions can only be made from traditional IRA accounts or Roth IRAs, and charitable contributions from the IRA must be payable directly from the IRA trustee to an eligible public charity such as FWCC. If the funds are made payable to the IRA owner at the time of the distribution, and THEN paid to the charitable organization, the gift will not be recognized as a charitable rollover.
If you are interested in knowing more about an IRA Charitable Rollover and whether it might be a tax advantageous way to support FWCC, call the FWCC office and ask to speak with Robin Mohr.
Giving to FWCC