Giving to York College

IRA Charitable Rollover extended through 2013!

The American Taxpayer Relief Act of 2012 includes a one-year extension of the IRA charitable rollover (Qualified Charitable Distribution). The provision is not fully retroactive to January 1, 2012, but it does include special transition rules for IRA gifts made in December 2012 and January 2013. The provision expires December 31, 2013.

Principal rules for direct transfers from a traditional or Roth IRA to a qualified public charity are:

• The IRA owner must be 70½ or older
• The owner may transfer no more than $100,000 each year
• The transfer qualifies for the required minimum distribution.
• The recipient must be a public charity with 501(c)(3) status. It may not be a donor advised fund or supporting organization.
• Outright gifts only (no gifts for a life income arrangement).
• Transfer must be made directly from a trustee to the charitable organization.

Recognizing issues with the late passage of the law, Congress included two special transition rules:

• Qualified charitable distributions made by January 31, 2013, may be counted retroactively for the 2012 tax year.
• A taxpayer who took a distribution from an IRA in December 2012, may make a contribution to a qualified charity before February 1, 2013, and treat this as a direct transfer.
• For more information on the transition rules and examples of how these provisions work, please contact Brent Magner at brent.magner@york.edu or 402-363-5636.

General description: Ordinarily, an IRA owner must report withdrawals as income and pay tax on them, 40% or more in some places once you add federal, state, and local taxes together.  Qualifying charitable IRA distribution (or rollover) gifts are not reportable as income, however, so they never create tax for the donor. A donor would have to report a similar gift from any other type of retirement plan as income, and then declare an income tax deduction. Not only would the gift be more complicated to execute than a charitable IRA rollover, but a variety of factors could prevent the deduction from completely offsetting the income, resulting in more taxes owed.

Details about a rollover gift:

1. Ask your IRA administrator to write a check from your IRA account to York College in the amount you wish to give.  To qualify it must be a direct rollover to the college or other charity of your choice.
2. Qualifying charitable IRA rollover gifts are not reportable as income so they create no tax for you.
3. A charitable IRA rollover counts toward your minimum distribution requirement although it is not counted as income.
4. You will not receive a charitable gift receipt for a charitable IRA rollover and may not claim the gift as a deduction on your taxes.

To discuss a charitable IRA rollover, please contact Brent Magner at 402-363-5636 or at brent.magner@york.edu.  Seek the advice of your financial planner or accountant before making any decision on a rollover.

Background

The charitable IRA rollover came into being as part of the Pension Protection Act of 2006. The rollover provision expired on December 31, 2007. It was reinstated and extended through December 31, 2009 and then reinstated a second time through December 31, 2011. Since it was first enacted in 2006, thousands of donors have made qualified charitable distributions and taken advantage of this giving option.