IRA Charitable Rollover

On December 16, 2014 the United States Senate passed the Tax Increase Prevention Act of 2014 (H.R. 5771). The bill includes a one year extension of expired tax provisions retroactive to January 1, 2014, one of which is the reauthorization of the IRA Charitable Rollover.

Through December 31, 2014, individuals age 70 ½ and older are able to transfer up to $100,000 from their IRA to a qualified public charity. The transfer will be made free of federal income tax and the gift qualifies for your 2014 required minimum distribution (RMD). Gifts may be transferred directly from traditional, rollover, and Roth IRAs. 

The IRA Charitable Rollover is an opportunity for you to invest in the future of Grand Valley while being able to take advantage of the tax benefits. Consult with your personal financial or legal advisors to determine if the IRA Charitable Rollover would benefit you and your philanthropic goals.

 
 
 

IRA Charitable Rollover FAQs

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 per year 2014. The provision expires on December 31, 2014.

 

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 Charitable 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 Charitable Rollover to support a specific fund at Grand Valley State University?

Yes, all IRA Charitable 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 required minimum 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 required minimum distribution from the IRA for the year.

 

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 your required minimum 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.

 

What is the procedure to execute an IRA Charitable Rollover?

Time is limited for 2014 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.

Sample Letter of Instruction to IRA Administrator for 2014 gifts

 

For more information, please contact University Development at 616-331-6000.