A Tax-Smart Option
For IRA Owners
If you own an IRA, you now have another way to save taxes while making a charitable gift. The Protecting Americans from Tax Hikes (PATH) Act of 2015 has made the Charitable IRA Rollover a permanently available option. If you are 70 ½ or older, you can satisfy your required minimum distribution (RMD) tax-free through direct transfers (maximum $100,000 total) to charity, such as the UC Riverside Foundation.
Why Consider This Gift?
- You can see the impact of your generosity today by making annual gifts from your IRA and then leave a bequest to perpetuate that support through an endowment.
- Transfers from your IRA to charity can fulfill all or part of your RMD but will be excluded from your adjusted gross income (AGI).
- You may save taxes whether you itemize or take the standard deduction.
- Though you don’t get a charitable deduction, you may save money in other ways (e.g., lower Medicare premiums and potentially lower tax bracket).
Frequently Asked Questions
Q. I've already named UC Riverside Foundation as the beneficiary of my IRA. What are the benefits if I make a gift now instead of after my lifetime?
A. By making a gift this year of up to $100,000 from your IRA, you can see the impact of your giving now. You can jumpstart the legacy you would like to leave and give yourself the joy of watching your philanthropy take shape. In addition, you can take advantage of the benefits named above.
Q. I'm turning age 70½ in a few months. Can I make this gift now?
A. No, the legislation requires you to reach age 70½ by the date you make the gift.
Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes, direct rollovers to a qualified charity can be made only from a traditional or Roth IRA. Under certain circumstances, however, you may be able to roll assets from a pension, profit sharing, 401(k) or 403(b) plan into an IRA and then make the transfer from the IRA directly to the UC Riverside Foundation. To determine if a rollover to an IRA is available for your plan, speak with your plan administrator.
Q. Can my gift be used as my required minimum distribution under the law?
A. Yes, absolutely. If you have not yet taken your required minimum distribution, the IRA charitable rollover can satisfy all or part of that requirement. Contact your IRA custodian to complete the gift.
Q. Do I need to give my entire IRA to be eligible for the tax benefits?
A. No, you can give any amount under this provision, as long as it is $100,000 or less for the year.
Q. I have two charities I want to support. Can I transfer $100,000 from my IRA to each charity?
A. Under the law, only the first $100,000 that you transfer from your IRA to charity will count toward your RMD and benefit from tax-free treatment. If you would like to support UCR and another charity, you may give each organization $50,000, or any combination that totals $100,000 or less, to be excluded from your AGI. Any amount over $100,000 in one year must be reported as taxable income.
Q. My spouse and I would like to give more than $100,000. How can we do that?
A. If you have a spouse who is 70½ or older and has an IRA, s/he can also give up to $100,000 from his or her IRA.
It is wise to consult with your tax professionals if you are considering making a gift through charitable IRA rollover. Please feel free to contact Tony Truong, Director of Gift Planning, at 951-827-3793 or firstname.lastname@example.org with any questions you may have.