A significant incentive that removes the tax penalty for some donors who want to use their IRAs to fund a charitable gift is set to expire at the end of December. The temporary legislation allows donors aged 70½ and older to direct distributions of up to $100,000 from their IRAs and Roth IRAs to nonprofits like The Nature Conservancy without incurring income tax on the withdrawal.
“This important tax break is being taken advantage of by some of our donors and we welcome it,” said Jim McDuffie, philanthropy director for The Nature Conservancy, Florida Chapter.
In addition to working on marine and freshwater protection for people and nature, the 50-year-old Florida Nature Conservancy has helped protect 1.2 million acres statewide, while the 60-year-old global organization has helped preserve more than 117 million acres.
Gifts must be outright — the donor cannot use the distribution to fund a life-income gift such as a charitable gift annuity. Gifts can only be made from a traditional or Roth IRA — other types of retirement plans are not covered by the charitable rollover law.
A donor will receive no charitable income tax deduction for the distribution from the IRA. However, gifts from an IRA will not count toward the deduction limitation for charitable gifts.
As a general rule, gifts of cash can be deducted up to 50 percent of a donor’s adjusted gross income (AGI) each year, and gifts of appreciated property are limited to 30 percent of AGI; excess deductions can be carried forward for up to five additional years. The temporary legislation exempts qualified distributions from IRAs from such limitations.
“There are some financial planners who recommend donating highly appreciated stock directly to charities like us rather than the charitable IRA transfer. It avoids capital gains tax on the stock and allows a tax deduction for the fair market value of the asset,” McDuffie said. “Either way we appreciate it. We depend on the generosity of donors and will use their money wisely in Florida to protect the lands and waters life depends on.”
The Nature Conservancy is a leading conservation organization working around the world to protect ecologically important lands and waters for nature and people. The Conservancy and its more than 1 million members have protected nearly 120 million acres worldwide. Visit The Nature Conservancy on the Web at www.nature.org.