IRA Rollover Gifts
IRA Rollover Gifts
The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 permits individuals to rollover up to $100,000 from an individual retirement account ("IRA" or "Roth IRA") directly to a qualifying charity without recognizing the assets transferred to the qualifying charity as income.
The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 uses the term "qualified charitable distribution" to describe an IRA charitable rollover. A qualified charitable distribution is made directly from a traditional or Roth IRA of an individual who is 70-1/2 or older to an eligible charitable organization. An individual may exclude up to $100,000 from his/her gross income for each tax year for qualified charitable distributions from IRAs.
Effective Date: This legislation is time-limited. To utilize this tax benefit for the 2011 taxable year, you must make the transfer dated (postmarked) by Dec. 31, 2011.
Frequently Asked Questions for IRA Rollover Gifts
Glossary of acronyms that may be used when discussing IRA Rollover Gifts:
QCD - Qualified Charitable Distribution
RMD - Required Minimum Distribution
AGI - Adjusted Gross Income
1. What is The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010?
This bill extends for two years (through 2011) the provision that permits tax-free distributions to charity from an Individual Retirement Accounts (IRA) of up to $100,000 per taxpayer, per taxable year.
2. What is a Qualified Charitable Distribution (QCD)?
Any distribution from a traditional IRA made directly by the IRA administrator to the University of Central Florida Foundation Inc. (or any charitable organization) that would have been taxable if distributed to the plan participant. Click this link for a sample letter to your plan administrator.
3. Does anyone who wants to make a charitable distribution from their IRA qualify for a QCD?
No. You must have reached age 70½ by the date of the contribution. It is important to distinguish this rule from the rule that requires plan participants to begin receiving the Required Minimum Distributions (RMD) in the same year they attain age 70½.
4. What are the effective dates for making a charitable distribution from my IRA?
The new rules are effective for transfers made during 2010 and 2011. However, charities across the nation are hoping to demonstrate successful gifting activity in order to influence Congress to seriously consider passing additional legislation affording this opportunity beyond 2011. Charitable gifts from an IRA may be counted as a 2011 gift if they are delivered or postmarked to the UCF Foundation Inc. no later than Dec. 31, 2011.
5. Are there limitations on the amount?
Yes. The amount that can be excluded from a plan owner's income is limited to $100,000 per taxpayer per year. Therefore, a married couple could donate up to $200,000 provided each spouse owns at least one IRA and can each make a qualified charitable distribution of $100,000 from their plans.
6. Can I designate this IRA distribution to a specific program(s) or scholarship(s)?
Yes, in most cases. However, you may not receive any quid pro quo benefits in exchange for your contribution. Therefore funds that provide recognition benefits, or other tangible benefits, such as the Golden Knights Club, are excluded under The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
7. Does the distribution fulfill my plan's Required Minimum Distributions (RMD)?
Yes. If, for example, you are required to withdraw 5% from your IRA for the year, you can direct the entire amount to the UCF Foundation Inc. in satisfaction of the RMD.
8. Who is the donor - me (the plan participant) or the plan?
You, the individual/plan participant, are the donor of the QCD.
9. Do I receive a tax deduction for a charitable distribution from my IRA?
No. You do not receive a tax deduction for the charitable distribution.
10. So what are the advantages of making a charitable distribution from my IRA?
Advantages will vary based on individual circumstances. As always, we recommend that you consult your professional tax advisor. In general, per current tax law, charitable deductions are limited to 50% of a donor's Adjusted Gross Income (AGI). By making a charitable distribution from your IRA, you will be able to make charitable contributions beyond the above limit without any added tax consequences.
11. Are other retirement plans eligible within the The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010?
No. The exclusion applies to traditional IRAs only. Other forms of retirement plans such as 401(k), 403(b) annuities, defined benefit and contribution plans, profit sharing plans, Keoghs, and employer-sponsored SEPs and SIMPLE plans are NOT eligible. However, some of the non-eligible plans may afford the opportunity for rollover into an IRA. You should visit with your plan administrator to explore this option.
12. Can the IRA distribution check be made payable to the individual/plan participant, who then endorses the check to the University of Central Florida Foundation?
No. In order to qualify for the exclusion, the check must be payable directly to the University of Central Florida Foundation Inc.
13. Can I direct this IRA distribution to a donor advised fund?
No. The The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 does not provide this opportunity.
14. Can I direct this IRA distribution to a charitable gift annuity or a charitable remainder unitrust?
No. The The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 does not provide this opportunity.
15. Can I designate this IRA distribution to pay on an existing pledge commitment?
Yes. The UCF Foundation Inc. will follow the same approach as used for the payment of an existing pledge through a donor-advised fund. We will record the charitable distribution from the IRA as an outright gift and write-off the corresponding donor pledge.
16. Will I receive a receipt for the gift?
Yes. As such, the UCF Foundation Inc. will provide written acknowledgment to the donor shortly after the gift is received.
17. Donor Alert! It is very important for donors to inform the UCF Foundation Inc. if they are making an IRA rollover gift. Due to certain confidentiality policies, some plan administrators may not be allowed to inform the UCF Foundation Inc. of the donor's gift. Click this link for a sample letter to the UCF Foundation, Inc.
Please note that some Plan Administrators may require a Notary Public Signature or a Medallion Signature Guarantee.
If you have questions please contact:
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Donald Hale Director of Gift Planning 407-882-1554 This e-mail address is being protected from spambots. You need JavaScript enabled to view it |
