IRA Charitable Rollover FAQs
The American Taxpayer Relief Act of 2012 has extended the IRA Rollover for 2012 and 2013. Originally passed in 2006 as part of the Pension Protection Act, the IRA Rollover allows individuals age 70½ and older to make direct transfers totaling up to $100,000 per year to 501(c)(3) charities, without having to count the transfers as income for federal income tax purposes.
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 per year for 2012 and 2013. The provision expires on December 31, 2013.
From what accounts can I make transfers?
Transfers must come from your IRAs directly to Grand Valley State University. If you have retirement assets in a 401k, 403b etc., you must first roll those funds into an IRA, and then you can direct the IRA administrator to transfer the funds from the IRA directly to Grand Valley State University.
To what charities can I make gifts?
Tax exempt organizations that are classified as 501(c)(3) charities, including Grand Valley State University, to which deductible contributions can be made.
Can I use the IRA Rollover to fund life-income gifts (charitable gift annuities, charitable remainder trusts, or pooled income funds), donor advised funds or supporting organizations?
No, these are not eligible.
Can I use the IRA Rollover to support a specific fund at Grand Valley State University?
Yes, all IRA Rollover gifts can be designated to specific funds.
How will Grand Valley State University 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 Grand Valley State University as income, provided it goes directly from the IRA administrator 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 Rollovers count towards your minimum required distribution from the IRA for the year.
How do I know if an IRA Rollover is right for me?
You are at least age 70½, and:
- You do not need the additional income necessitated by your 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 do not itemize deductions, OR
- You are subject to income phase-outs on your income tax deductions.
I already took my distribution for 2012, is it too late to use it to make a charitable gift for 2012?
Under a special provision in the Act, if you took a distribution from your IRA in December, 2012, you can elect to treat all or part of it (up to the $100,000 threshold) as a gift to Grand Valley State University. You need to transfer it to us in cash before February 1, 2013, and then make the appropriate election on your tax return once the Treasury provides instructions on how to do so.
It would be very helpful to me to make a charitable gift from my IRA for 2012, does the new law allow for this?
Yes. You can elect to treat any transfer you make in January 2013 (up to the $100,000 threshold) as occurring in either 2012 or 2013. The Treasury still has to provide us with instructions on how to make the election, but for now you simply transfer the funds as you would for any other IRA Charitable Rollover and make the election at the appropriate time. If you want, you can even transfer $200,000 in January, electing half for 2012 and the other half for 2013.
What is the procedure to execute an IRA Rollover?
Time is limited for 2012 gifts, so contact your IRA administrator to learn their procedures. We also offer a sample letter you can send to your plan provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can look for the check from your IRA administrator.
For more information, please contact University Development at 616-331-6000.