Permanent IRA Rollover Signed Into Law

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On Friday, December 18, 2015, President Obama signed the Permanent IRA rollover into law. H.R. 2029 retroactively reinstates the IRA Charitable Rollover provision originally enacted into law in 2006. The Charitable Rollover provision gives donors age 70 ½ and older the opportunity to transfer up to $100,000 from their IRA to a qualified public charity free of federal income tax.

A charitable gift in the form of an IRA distribution can count toward the annual Required Minimum Distribution (RMD) (link here:https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Required-Minimum-Distributions-(RMDs) required by the IRA without increasing the donor’s adjusted gross income.

As the December 31st deadline approaches for taking RMDs, it is important for nonprofit organizations to communicate with their donors how a charitable gift from his/her IRA can be mutually beneficial.

Tips for Charitable Organizations:

  • Inform staff that this provision has been permanently passed into law.
  • Provide talking points to staff and volunteer solicitors about the benefits donors received when they give your organization a charitable gift through an IRA rollover.
  • Reach out to donors whom have made a similar donation in previous years and/or you know were waiting to see whether this provision would be permanently extended.
  • As a gentle reminder that they can reach their RMD through a charitable gift from an IRA, consider sending a donor email on the topic.
  • To encourage others to explore this option, develop a post-December 31st communication highlighting the story of a donor who gave a gift from an IRA.  

Tips for Donors:

  • Consult your financial advisor about your IRA and RMD.
  • Contact the nonprofit of your choice and discuss your gift options.
  • If you decide to distribute a charitable gift from your IRA, ensure that your IRA’s custodian transfers it directly from the IRA to the charity.
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Caitlin Bristow

Caitlin Bristow is a Consultant at Campbell & Company. She graduated from Saint Louis University School of Law where she studied Nonprofit law and Estate Planning. She enjoys the intricacies of planned giving and how these gifts can help her clients.

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