Giving Through an IRA Charitable Rollover
Are you or someone you know age 72 or older?
The IRA Charitable Rollover allows individuals age 72 and older to make a gift of a lifetime during their lifetime. Donors can make a qualified charitable distribution from their IRA directly to a qualifying charity, such as the DeKalb County Community Foundation, without declaring the distribution as income.
Support your charitable interests in the community with a tax-free gift, up to $100,000, from your IRA to the Community Foundation.
Benefits of IRA Rollover Gifts:
- Your charitable gift will cost you less by using pre-tax IRA assets
- The IRA Charitable Rollover is not subject to income taxes
- Lower your taxable income for the year by using your IRA Charitable Rollover to meet your annual required minimum distribution
IRA Charitable Rollover Giving Options
Through your gift, you have the ability to create a new charitable fund or to support an existing fund:
- Community Impact Funds
Community Impact funds provide the DeKalb County Community Foundation's board with the greatest flexibility to help today and shape tomorrow. Through grantmaking, this type of fund allows flexibility to give where the need is most. Grant programs include Community Needs Grants, Emergency Grants, incentive pool dollars for Give DeKalb County, and Economic Development Grants.
- Designated Funds
Designated funds provide grants to organizations, nonprofits or institutions named by the donor. These funds provide much needed support and resources both now and in the future.
- Field of Interest Funds
Field of Interest funds meet the needs of a particular field (i.e. youth, elderly, literacy, food security) or geographic area that is of interest to you, the donor.
- Scholarship Funds
Scholarship funds encourage professional development and career advancement by creating opportunity for students to further their education. Donors may define eligibility criteria, the selection committee, the school, and the field of study.
NOTE: IRA Charitable Rollovers may not be used to support donor advised funds.
Who Should Consider an IRA Charitable Rollover?
- Individuals age 72 and older who have more money in their IRA than needed for daily living expenses and long-term care.
- Spouses who both have IRA accounts and do not need the income to support daily living expenses. Each spouse can transfer up to $100,000, tax free from their IRA.
- Generous donors who may give more to charity then they can deduct in a tax year (IRA Charitable Rollovers are exempt from federal income taxes).
- Donors who do not itemize deductions and regularly give a portion of their income to charity.
- Individuals who wish to gift up to $100,000 from their taxable estate.
- Contact your professional advisor to determine if the IRA Charitable Rollover is a good option for you.
- Download a sample request letter to complete and send to your IRA Plan Administrator.
- Notify the DeKalb County Community Foundation of your gift by completing and returning this sample notification letter.
- 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 DeKalb County Community Foundation—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 DeKalb County Community Foundation.
- 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?
Typically, IRAs are held by a financial service or trust company. Please contact your IRA administrator directly to initiate the transfer to the DeKalb County Community Foundation.