If you are 70½ or older and have a traditional IRA account, you can make tax-free gifts of up to $100,000 each year from your required minimum distributions, which are considered taxable income unless donated to a nonprofit like AE911Truth.
Did you know that the “IRA Charitable Transfer” benefits donors aged 70 ½ and up?
The IRA Charitable Transfer is an excellent way to make gifts and receive tax benefits in return. As you plan your required minimum distributions for this year, consider using your IRA account to make the most of your charitable giving. You receive a tax benefit even if you take the standard deduction! It’s important to consider your tax situation before deciding whether to make a charitable contribution from your IRA. Be sure to share this gift plan with your financial advisor.
- You must be age 70½ or older at the time of gift.
- Transfers must be made directly from a traditional IRA account by your IRA administrator to AE911Truth.
- Gifts must be outright. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.
- Gifts from 401k, 403b, SEP and other plans do not qualify. Ask your financial advisor if it would be right for you to create a traditional IRA account so you can benefit from the IRA Charitable Transfer.
- Donate up to $100,000 annually.
- IRA Charitable Transfers are excluded gross income for federal income tax purposes on your IRS Form 1040. You receive no charitable deduction
- Counts toward your required minimum distribution for the year in which you made the gift.
John is 71 and wants to make a contribution to AE911Truth. He has $500,000 in his IRA and he wants the contribution to be $20,000. He can authorize the administrator of his IRA to transfer $20,000 to AE911Turth. Because the IRA Charitable Transfer is excluded from income, John will not be eligible for a charitable income tax deduction but he still receives tax savings. The $20,000 distributed to AE911Truth will be counted toward his annual minimum required distribution and he will not pay income tax on the portion given to charity.
What’s the IRS Rule?
The IRA Charitable Transfer 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. No charitable deduction may be taken, but distributions will qualify for all or part of the IRA owners required minimum distributions.
Individuals who are age 70½ or older at the time of the contribution (you have to wait until 6 months after your 70th birthday to make the transfer).
From what accounts can I make transfers?
Transfers must come from your IRAs directly to AE911Truth. 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 AE911Truth.
What are the tax implications to me?
- Federal — You do not recognize the transfer to AE911Truth as income, provided it goes directly from the IRA administrator to us; therefore, 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.
Can my spouse also make an IRA Charitable Transfer?
Yes, every individual who is the owner of a traditional IRA account can use the IRA Charitable Transfer for up to $100,000 each year.
What is the procedure to execute an IRA Charitable Transfer?
Please let your plan administrator know that this gift must be sent prior to December 31 to qualify as an IRA Charitable Transfer for that year.
Please contact us if you have already included AE911Truth in your estate planning or if you are considering doing so. Our federal tax I.D. number is 26-1532493. You may want to download a copy of our confirmation of IRS tax-exempt status.