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IRA Charitable Rollover

The IRA Charitable Rollover allows individual retirement account holders age 70 ½ and older to make qualified charitable distributions (QCD) up to $100,000 per year (and up to $200,000 per year for married couples) from their IRA to the IEEE Foundation without having to count the transfers as income for federal tax purposes. Since no tax is incurred on the withdrawal, gifts do not qualify for an income tax charitable deduction, but are eligible to be counted toward an individual’s minimum required distribution.

Important Provisions of the IRA Charitable  Rollover:

  • Distributions must be made directly to a qualified charity by the plan administrator of an IRA. Retirement assets in 401(k), 403(b), SEP, or SIMPLE plans do not qualify but may be rolled into a new or existing IRA and transferred to the charity.
  • Distributions may only be made to 501(c)(3) tax exempt organizations and cannot be made to donor advised funds, private foundations, or supporting organizations.
  • Distributions may not be used to fund life-income gifts such as charitable gift annuities, charitable remainder trusts, or pooled income funds. 

 

Frequently Asked Questions

What is a IRA Charitable Rollover?

The IRA Charitable Rollover, or qualified charitable distribution (QCD), is a special provision allowing certain donors to exclude from taxable income—and count toward their required minimum distribution—certain transfers of Individual Retirement Account (IRA) assets that are made directly to public charities, including the IEEE and IEEE Foundation. Since it was first made available in tax year 2006, many donors age 70 ½ or older have used this popular option to support the areas of their choice with tax-wise gifts ranging from $100 to $100,000 (and up to $200,000 for married couples).

How does this help me?

IRA Charitable Rollover makes it easier to use IRA assets, during lifetime, to support your favorite charities.

Why will lifetime IRA gifts be easier?

Under current law, withdrawals from traditional IRAs and certain Roth IRAs are taxed as income, even if they are immediately directed to a charity. The donor receives an income tax deduction for his or her donation, but various other federal, and sometimes state, tax rules can prevent the deduction from fully offsetting this taxable income. As a result, many donors have chosen not to use IRA assets for lifetime gifts. The IRA Charitable Rollover eliminates this problem.

What gifts qualify for a IRA Charitable Rollover?

A gift that qualifies, technically termed a “qualified charitable distribution,” is:

  • Made by a donor age 70 ½ or older.
  • Transferred from a traditional or Roth IRA directly to a permissible public charity, such as the IEEE or IEEE Foundation. (If giving in this manner, please tell your broker or fund manager to name you as the donor on the transfer, and if your gift is intended for a particular area have the broker specify that as well.)
  • Completed during the applicable tax year.

Is there a limit on the amount that can be given?

Yes, there is a limit. An individual taxpayer's total IRA Charitable Rollover gifts cannot exceed $100,000 per tax year. Married couples can donate up to $200,000 per year.

What about the required minimum distribution?

If you have not already taken your required minimum distribution in a given year, a qualifying rollover gift can count toward satisfying this requirement.

Is an income tax deduction also available?

No. The gift would be excluded from income, so providing a deduction in addition to that exclusion would create an inappropriate double tax benefit.

Why are Roth IRAs included? Aren't withdrawals from a Roth IRA tax-free?

Withdrawals from a Roth IRA may be tax-free only if the account has been open for longer than five years or if certain other conditions apply. Otherwise, withdrawals are taxed as if they came from a traditional IRA. Therefore, certain Roth IRAs could benefit from a IRA Charitable Rollover.

Can other retirement plans, such as 401(k) and 403(b) accounts, be used?

No. However, it may be possible to make a tax-free transfer from such other accounts to an IRA, from which a charitable rollover can then be made.

Is my IRA Charitable Rollover gift eligible for an income tax charitable deduction?

No. Donors of qualified IRA gifts do not receive a federal income tax charitable deduction for the IRA gift, as they are not being taxed on the withdrawal.

Can a gift be made to any charity?

No. Excluded are:

  • Donor advised funds;
  • Supporting organizations; and
  • Private foundations.

Who can benefit from using the IRA Charitable Rollover to make a gift?

  • People with significant assets in an IRA.
  • People making gifts that are large, relative to their income. (Because a charitable rollover is not included in taxable income, it does not count against the usual percentage limitations on using income tax charitable deductions.)
  • People who do not itemize.

Can a rollover gift be used to pay my pledged support to the IEEE or IEEE Foundation?

Yes. You can honor your pledge with one or more qualified IRA Charitable Rollover transfers of up to $100,000 per person (and $200,000 for married couples), per calendar year. 

Can a rollover gift be used to fund a charitable remainder trust or charitable gift annuity?

No. The donor cannot receive any benefits in return for the gift. This includes life income plan payments.

Are there any benefits that a donor can receive?

The only permissible benefits from a IRA Charitable Rollover gift are those that would not reduce the tax deduction for which the donor would have otherwise qualified. At the IEEE and IEEE Foundation, a charitable IRA rollover gift is allowed to count toward naming opportunities and toward recognition society memberships such as the Heritage Circle and Goldsmith Legacy League.

What if a withdrawal does not meet the requirements of a IRA Charitable Rollover?

It simply will be included in taxable income as other IRA withdrawals currently are.

Is the IRA Charitable Rollover right for everyone?

While this is a great option, other types of gifts may provide donors with more tax benefits. As with any gift planning question, donors should consult their tax professionals for specific advice.

Can I still make a gift with an IRA beneficiary designation?

Absolutely. Whether or not you choose to make a IRA Charitable Rollover gift, you can still designate the IEEE or IEEE Foundation as a beneficiary to receive IRA assets after your lifetime. The lifetime IRA Charitable Rollover is simply another option for donors who would like to see their philanthropy at work now.

If I made a IRA Charitable Rollover gift in other tax years, can I do this again for the current tax year?

Yes. The current law extends the IRA Charitable Rollover provision indefinitely—with no expiration date—allowing individuals to make qualifying gifts every tax year.

May I make a gift from my IRA if I have already taken my required minimum distribution (RMD)? 

Yes. You can exclude up to $100,000 (per IRA account owner and up to $200,000 for married couples) from gross income for qualified charitable donations. The donation counts toward your RMD but is not limited by your RMD.

Are there other tax advantages to gifting through a qualified IRA? 

Yes. Qualified IRA gifts are not subject to percentage of adjusted gross income (AGI) limitations for charitable contributions and are not reportable as income for federal income tax or for Social Security income purposes. The amounts withdrawn are not subject to state income taxes in most states. Donors who do not itemize deductions on their federal income tax returns may benefit from qualified IRA gifts for their exclusion from gross income. Amounts withdrawn from an IRA account are removed from the donor’s taxable estate. Talk to your tax advisor to see which benefits apply to your specific situation.

Are IRA distributions already taken by me eligible to gift as qualified charitable distributions? 

No. However, you can make gifts from IRA distributions that do not meet the requirements of a qualified charitable distribution. In such cases, the IRA distribution would be recognized as income for income tax purposes and typically would be eligible for a federal income tax charitable deduction.

More questions?

Contact:

Rich Allen
Senior Campaigns Manager
IEEE Foundation
445 Hoes Lane
Piscataway, NJ 08854, U.S.A.
Phone: +1 732 465 5871
e-mail: Richard.Allen@ieee.org


 The information on this site is for educational purposes only and is not intended as legal, tax, or investment advice. If you are considering a gift of securities to the IEEE Foundation, we highly recommend you consult with your own tax and legal advisors to determine the best options for you.

IEEE Foundation

IEEE Development Office
445 Hoes Lane
Piscataway, NJ 08854, U.S.A.
Phone: +1 732 465 5871
Email: donate@ieee.org

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