IRA Giving Opportunities

The "Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010" extends provisions from prior tax acts including "The Pension Protection Act of 2006" allowing qualifying taxpayers to use their IRAs to make charitable gifts. This law creates tremendous opportunity for clients and charities alike.

Do you have clients who fit any of the following?

  1. Those that are forced to take, but do not need, required minimum distributions
  2. Those that would like to endow their favorite charity(s)
  3. Those looking for a simple method of year-end gifts
  4. Those looking to exceed the 50% AGI limitation
  5. Those who take a Standard Deduction on their 1040

In order to "qualify" as an IRA Charitable Rollover, several conditions must be met: (1) individuals must be 70 1/2 and older, (2) the amount cannot exceed $100,000 and (3) the distribution must go directly from the IRA custodian to the named qualified charity. Unfortunately, split-interest gifts (i.e. Charitable Remainder Trusts) and donor-advised funds are not "qualified" recipients of an IRA charitable rollover.

Designated Fund Option

In addition to a direct transfer from a donor's IRA to their favorite charity, great opportunities also exist in Designated Funds through Renaissance Charitable Foundation (RCF).

An IRA Rollover to a Designated Fund, sponsored by RCF, qualifies as long as:

  1. Donor does not control the investments
  2. Donor names 1 charity to always receive grants, or
  3. RCF picks the charity to benefit from grants

In the Designated Fund Agreement, donors can even choose a grant payment schedule so that their favorite charity receives an annual grant on the donor's birthday. Another option is to invest the IRA rollover proceeds for 7 years, and then start annual grants to the designated charity.

Benefiting Multiple Charities - If a donor wants to benefit three charities by an IRA Charitable Rollover to a Designated Fund, the donor can easily create three separate Designated Funds.

Timing - Charitable IRA Rollovers during January 2011 may qualify as a rollover for either 2010 or 2011 for both Required Minimum Distribution (RMD) and Qualified Charitable Distribution (QCD) purposes.

IRA Rollover Strategies

  • Landy - $100,000 IRA Rollover to a Designated Fund for Charity
  • Dixon - $20,000 Direct IRA Rollover to Charity
  • Henry - $40,000 IRA Rollover to a Designated Fund for Charity

If you'd like to continue reading about charitable planning strategies - read our program circular here.

Call 866.803.0389 for more details.