Did You Know?
If you are 70 1/2 or older and own an IRA, there is something you should know. Last year Congress permanently enacted the law that allows you to make gifts from your IRA directly to charity and avoid taxes. But, in order to take advantage of this opportunity for 2016, you must act before December 31.
IRA gifts can satisfy all or part of a required minimum distribution, reducing your taxable income for 2016. You can transfer up to $100,000 to a qualified non-profit such as the Alley Theatre. No charitable deduction is allowed, but donors avoid the income tax that would otherwise be owed on a withdrawal. In addition, donors who don’t itemize their tax deductions can also benefit from this opportunity.
The basic rules for making an IRA rollover gift are listed below.
For more information on the IRA Charitable Rollover opportunity, please contact Mary Kay Wittrock, director of planned giving, at 713-315-3378 or firstname.lastname@example.org. For more information on this type of charitable giving, please click here.
IRA Gift Rules:
1. The donor is age 70 1/2 or older on the day of the gift.
2. The donor transfers up to $100,000 directly from the donor’s IRA to one or more qualified charities. If you receive a check personally and then write a check to the Alley Theatre, you will owe tax on the distribution. This opportunity only applies to IRAs and not to other types of retirement plans such as 401(k)s and 403(b)s.
3. The donor pays no federal income tax on the gift. The transfer generates neither taxable income nor a tax deduction, so donors can benefit even if they do not itemize their tax deductions.
4. The gift can satisfy all or part of the required minimum distribution for the year.
5. The gift may not be used to fund a gift annuity, charitable remainder trust, donor advised fund or private foundation.
6. The donor does not receive any goods or services in return for the rollover gift in order to qualify for tax-free treatment.
7. The new legislation does not have an expiration date. You can now make gifts in 2016 and beyond.
Please note that this information is not intended as legal or financial advice. The Alley Theatre strongly suggests that you consult your own legal, tax or financial advisor.