If you are 70½ or older, temporary legislation allows you to make cash gifts totaling up to $100,000 from your traditional or Roth IRA to The Nature Conservancy in 2014 without incurring federal income tax on the withdrawal.
This is good news for people who want to make a charitable gift during their lifetime from their retirement assets, but have been discouraged from doing so because of the income tax penalty. The current provision is effective through the 2014 tax year only.
Frequently Asked Questions:
- Who qualifies? Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½th birthday to make the transfer).
- How much can I transfer? $100,000 in 2014.
- From what accounts can I make transfers? Transfers must come from your IRA directly to The Nature Conservancy If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to The Nature Conservancy.
- Can I use the rollover to fund life-income gifts (charitable gift annuities, charitable remainder trusts, or pooled income funds)? No, these are not eligible.
- Can I use the rollover to fund donor advised funds or supporting organizations? No, these are not eligible.
- Can I use the rollover to support a particular purpose at The Nature Conservancy? As with all other gifts, you can direct your IRA Charitable Rollover gift as you see fit.
- How will the Conservancy count the gift? We will give you full credit for the entire gift amount.
- What are the tax implications to me?
- Federal – You do not recognize the transfer to the Conservancy as income, provided it goes directly from the IRA provider to us. However, you are not entitled to an income tax charitable deduction for your gift.
- State – Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still other states have no income tax at all.
- Does this transfer qualify as my minimum required distribution? Once you reach age 70½, you are required to take minimum distributions from your retirement plans each year, according to a federal formula. IRA charitable rollovers count towards your minimum required distributions for the year.
- What if I want to make a transfer in 2015? The current legislation is active only for 2014. Congress may extend this provision into 2015, but currently it has not. You can make a distribution in 2015, but if the provision is not extended you may have to recognize that distribution as income. However, in that case you would be able to take a charitable income tax deduction for the gift.
- How do I know if an IRA charitable rollover is right for me? You are at least age 70½ and
- You do not need the additional income necessitated by the minimum required distribution, OR
- Your charitable gifts already equal 50% of your adjusted gross income, so you do not benefit from an income tax charitable deduction for additional gifts, OR
- You are subject to a rule that limits your itemized deductions, OR
- You do not itemize deductions.
If you have questions or would like to speak to someone on our Gift Planning team, please call us at (877) 812-3698 (toll-free) or email us today.
Please note that The Nature Conservancy cannot render tax or legal advice and we urge you to consult with your professional advisor about your situation before making a charitable gift.
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