FREQUENTLY ASKED QUESTIONS ABOUT THE CHARITABLE IRA ROLLOVER
What is a charitable IRA rollover?
The charitable IRA rollover, or qualified charitable distribution (QCD), is a special provision allowing individual IRA owners to exclude from their taxable income -- and count toward their required minimum distribution -- a charitable transfer of Individual Retirement Account (IRA) assets made directly to public charities, including ECHO, Inc.
The provision was first enacted for tax years 2006 and 2007, and has been extended periodically, most recently in January 2013, when it was made available for 2012 (retroactively) and for 2013.
Since 2006, charitable donors age 70 1/2 and older have been able to use this popular option to support ECHO with tax-wise gifts ranging from $100 to $100,000.
How does this help me?
A charitable IRA rollover makes it simple to use IRA assets for making cash gifts.
Why will lifetime IRA gifts be easier?
Under current law, withdrawals from traditional IRAs and certain Roth IRAs are taxed as income, even if they are immediately directed to a charity. The donor receives a tax deduction for his or her donation, but various other federal, and sometimes state, tax rules can prevent the deduction from fully offsetting this taxable income. The charitable IRA rollover eliminates that concern for now.
What gifts qualify for a 2013 charitable IRA rollover?
A gift that qualifies, termed a “qualified charitable distribution,” must be:
- Made by a donor age 70 1/2 or older
- Transferred from a traditional or Roth IRA directly to a qualified, 501 (c) (3) public charity, such as ECHO Inc.
- Completed by December 31, 2013 for the 2013 tax year
In January 2013 I made a retroactive 2012 charitable rollover gift that counted for my 2012 taxes. Can I still make another rollover gift during calendar year 2013?
Yes. As long as each gift qualifies for the tax year in which you are counting it, you can have charitable IRA rollover gifts for both 2012 and 2013. Your 2013 gifts up to $100,000 from your IRA can be made at any time up through Dec. 31, 2013.
Is there a limit on the amount that can be given?
Yes, individual, charitable IRA rollover gifts may not exceed $100,000.
What about the required minimum distribution?
If you have not already taken your required minimum distribution, a qualified charitable rollover gift can count toward satisfying this requirement.
Is an income tax deduction also available?
No. The gift is excluded from income, so providing a deduction for the gift in addition to the exclusion would create a disallowed double tax benefit.
Why are Roth IRAs included? Aren't withdrawals from a Roth IRA tax-free?
Withdrawals from a Roth IRA may be tax-free only if the account has been open for longer than five years or if certain other conditions apply. Otherwise, withdrawals are taxed as if they came from a traditional IRA. Therefore, certain Roth IRAs could benefit from a charitable IRA rollover.
Can other retirement plans, such as 401(k) and 403(b) accounts, be used?
No. However, it may be possible to make tax-free transfers from these other accounts directly into an IRA, from which the charitable rollover can then be made.
Can a gift be made to any charity?
Not all charitable organizations can benefit like ECHO, Inc. Excluded are:
- Donor advised funds
- Supporting organizations
- Private foundations
Who benefits most from using the charitable IRA rollover?
- Owners of significant assets in their IRA, and/or a potentially significant ordinary income tax burden this year resulting from their qualified, mandatory distributions
- Donors desiring to make gifts that are large, relative to their income. (The charitable rollover is excluded from taxable income, so it will not count against usual percentage limitations on using charitable deductions.)
- Individuals or couples having so few deductions that they do not itemize
What benefits can I receive making this type of gift to ECHO, INC.?
The benefits from a charitable IRA rollover gift are in reducing overall exposure to taxable ordinary income. At ECHO, either designated or unrestricted uses for your gift may provide you with naming opportunities according to the program or project, at the appropriate funding levels and with donor naming rights in direct consultation with ECHO leadership.
Can I still make a gift with an IRA beneficiary designation?
Absolutely! Whether or not you choose to make a charitable IRA rollover gift now, you can still designate ECHO Inc. as your tax exempt, charitable beneficiary to receive your IRA assets after your lifetime to help alleviate detrimental taxation levels for family heirs. The current charitable IRA rollover is one of the best giving approaches now to see your philanthropic dollars go to work more quickly.
If I made a charitable IRA rollover gift already in 2013, can I do this again for 2014 and beyond?
As of this writing, this special tax benefit has not been extended beyond its current Dec. 31, 2013, expiration date. We will publish any further tax law updates about this gift plan.
For gift instructions and questions?
Feel free to visit our Development Office at 17391 Durrance Road, North Fort Myers, FL 33917.
ECHO is a qualified 501 (c) (3) charitable organization ranked #1 among international charities in the state of Florida by Charity Navigator.
Our vision is honoring God through sustainable hunger solutions. We accomplish this through our mission of equipping people with agricultural solutions and skills to reduce hunger and improve the lives of the poor.