Important Update: IRA Charitable Rollover
Returns for 2013—and, Through January 31, for 2012
Philanthropic individuals who wish to support Bentley and other charitable organizations now have a special opportunity to do so through the renewal of the IRA Charitable Rollover. This popular and tax-wise means of charitable giving expired on December 31, 2011, but under the recently enacted H.R.8 “the American Taxpayer Relief Act, SEC. 208" the IRA Charitable Rollover is back for all of 2013, and, through January 31, for 2012 as well.
The IRA Charitable Rollover allows individuals age 70½ or older to direct a distribution from their IRA to Bentley as a charitable gift without being taxed on the distribution amount for federal or state income tax purposes. IRA Charitable Rollovers will also count toward annual qualified minimum distributions.
Under two special short-term rules that expire at midnight on January 31, 2013, individuals have an opportunity to apply a rollover retroactively to 2012:
- Individuals age 70½ or older who took an IRA distribution in the month of December 2012 may make a cash contribution to Bentley by January 31, 2013, up to the amount distributed in December, and then elect to have that amount count as an IRA Charitable Rollover for 2012.
- Individuals whose IRA plan administrator completes an IRA Charitable Rollover directly to Bentley by January 31, 2013, will be deemed to have made the rollover on December 31, 2012.
- We recommend that transfers, whether by check or by wire, be received at Bentley by January 31 to ensure compliance with the provisions of this law.
This opportunity may also be attractive to philanthropically minded individuals who:
- Are not eligible to itemize charitable deductions on their income tax returns.
- Are subject to the 50% of AGI cash charitable deduction limitation and would not be able to deduct the full amount of their charitable contributions and/or fully use prior year carryover charitable deductions in 2012 and 2013.
- Expect an increase in their taxable income or income tax rate to the extent that it might impact other deductions or benefits.
- Wish to reduce the amount of their qualified retirement plan assets for future income and estate planning purposes.
In order for a gift to qualify as a Qualified Charitable Distribution, the following requirements must be met:
- Donors must be at least 70½ years of age when the distribution is made.
- The gift must be made from a qualified IRA and transferred directly to Bentley by the plan's administrator.
- In order to make a transfer from other forms of qualified retirement plans, such as 401(k)s, Keoughs, 403(b)s, SEP-IRAs, etc., the donor must transfer the intended gift amount to a qualified IRA, then instruct the IRA plan administrator to transfer the amount to Bentley University.
- Gifts may not exceed $100,000 per plan owner in a given year. Gifts made in January 2013 under the special 2012 provision are counted as 2012 gifts and will not be included in the 2013 limit.
- Gifts must be made for a current use purpose or for endowment. Life income gift plans, such as charitable remainder trusts and charitable gift annuities, are not eligible.
- IRA Charitable Rollover gifts may not be made to donor-advised funds, such as those supported by community foundations or financial firms, or to supporting organizations.
- No goods or services may be provided in exchange for such gifts.
For additional information contact: Liz Siladi, Director of Gift Planning, Bentley University, 175 Forest Street, Waltham, MA 02452; 781.891.2475; email@example.com
The information provided herein is solely for informational and educational purposes and is not meant to convey tax or legal advice. Please consult your own professional advisor for applicability to and implications for your personal circumstances.