IRA Charitable Rollover Extended through 2013

If you own an IRA and are over age 70½, you may transfer up to $100,000 directly from your IRA to JFCS with no federal income tax liability. The IRA rollover provides an excellent opportunity to make a gift during your lifetime from an asset that would be subject to multiple levels of taxation if it remained in your taxable estate. You may also use your IRA charitable rollover as a convenient and effective means to establish or contribute to an already-existing Named Endowment Fund.

It is important to remember that in order to have your gift count as an IRA charitable rollover, the distribution must go directly from the IRA custodian to JFCS. For your convenience, you may use our sample letter of instruction that you can send to your IRA administrator. Please also note that the new law does not allow contributions to donor advised funds, supporting foundations, private foundations, life income plans, and charitable trusts.

Planning Your Legacy with Your IRA or Retirement Plan

Retirement plan proceeds paid after death are subject to both income and estate taxes. These are, therefore, not ideal assets to leave to your heirs. Naming JFCS as the beneficiary of your retirement plan or a portion thereof can save taxes and leave a legacy of generosity and kindness.  This is done by completing a simple beneficiary designation form that does not necessitate a change in your will or other estate planning document.

FAQs for IRA Rollovers

• Who qualifies? Individuals who are age 70½ or older at the time of the contribution.
   
• How much can I transfer? You may give up to $100,000 per year.  In addition, your spouse may also give $100,000 per year, if he or she also has an IRA.  These distributions will count toward your required minimum distribution but are not capped by that amount.
   
• From what accounts can I make transfers? Transfers must come from your IRAs directly to JFCS. 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 JFCS. Most Roth IRAs do not qualify for the IRA charitable rollover.
   
• Can I use the 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 rollover to establish or contribute to an already-existing Named Endowment Fund? Yes, these are eligible.

• Can I use the rollover provision to pay off a pledge? Yes.
   
• What are the tax implications to me? You do not recognize the money transferred from your IRA to JFCS as income; however, you are not entitled to an income tax charitable deduction for your gift.
   
• Does this gift count towards my minimum required distribution? Yes, up to $100,000. 
   
• How do I know if an IRA charitable rollover is right for me? If you are at least age 70½ and
  • You do not need the additional income necessitated by the minimum required distribution, OR
  • You do not itemize deductions on your tax return, OR
  • Your charitable gifts for the year already exceed the limitation (generally 50% of your adjusted gross income for cash gifts), OR
  • You are subject to income tax deduction and exemption phase outs.

We recommend that you consult your professional advisors to determine the effect of these rules on your specific tax situation. 

• What is the procedure to execute an IRA charitable rollover? To complete an IRA charitable rollover, you must instruct your IRA provider to make a distribtution directly from your IRA to JFCS. You can send our sample letter of instruction to your IRA provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can properly attribute the funds as your gift to JFCS.
   

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