The IRA charitable rollover is now a permanent option for individuals age 70½ and older who want to make a gift of a lifetime during their lifetime. Donors are permitted to make a qualified charitable distribution from their IRA directly to a qualifying charity, such as the Community Foundation, without declaring the distribution as income.
This is an excellent opportunity to establish a new fund at the Community Foundation of Middlesex County to fulfill your charitable dreams and wishes. Transfers from IRAs can fund Field of Interest, Designated, Education Award, and Undesignated Funds as well as support operations at the Community Foundation. This provision does NOT allow transfers to Donor Advised Funds.
Here is a recap of the IRA charitable rollover rules:
To transfer a gift from your IRA, please contact your IRA administrator directly. To create a new fund or add to an existing fund at the Community Foundation of Middlesex County, please contact Cynthia Clegg at (860) 347-0025 or Cynthia@MiddlesexCountyCF.org.
Why do donors give IRA assets to their community foundation?
After decades of deliberate saving, some of today’s retirees have more money in their IRAs than they need for daily living expenses and long-term care. For larger estates, a good portion of IRA wealth goes to estate taxes and income taxes of non-spousal beneficiaries; heirs may receive less than 50 percent of IRA assets passed on to them through estates. Instead, IRA holders may choose to leave their IRAs to qualified charitable organizations such as the Community Foundation of Middlesex County—choosing charity over taxes.
What are the tax implications of an IRA charitable rollover gift?
Because the transfer occurs directly from your IRA to a qualified charity, you pay no income tax on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your tax deductions. The gift can satisfy all or part of your required minimum distribution (RMD) for the year.
To what charities can an IRA charitable rollover be made to?
IRA charitable rollovers must be made directly to a 501(c)(3) organization such as the Community Foundation of Middlesex County.
Are there any IRA transfers to the community foundation that DO NOT qualify for preferred tax treatment?
Yes. Transfers to supporting organizations and Donor Advised Funds do not qualify. Also, IRA charitable rollover transfers cannot be made to charitable annuities, charitable lead trusts and charitable remainder trusts. Because such transfers do not count as qualified distributions under these special rules, the donor will have to first recognize those distributions as income. The donor’s charitable deduction must then be calculated as a regular itemized deduction.
How can an IRA gift be made?
IRAs are typically held by a financial service or trust company. Please contact your IRA administrator directly to initiate the transfer to the Community Foundation of Middlesex County.
For questions or more information on IRA charitable rollovers, please contact Cynthia Clegg at (860) 347-0025 or Cynthia@MiddlesexCountyCF.org.
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