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Charitable IRA Transfers
 You Can Give More for Less
American over age 70½ no longer pay federal income tax on individual retirement account (IRA) funds given to charity up to $100,000 per person, per year. So your retirement funds can go father than ever before.
You can make a difference.
Your community foundation can help you connect to the causes you care about most. You can support an existing fund or establish a new charitable fund in your name or the name of a loved one. Giving is one of life’s pleasures; we can help you enjoy it today.
By giving through your community foundation, you can use your gift to meet ever-changing community needs – including future needs that often cannot be anticipated at the time your gift is made. Your gift can target the causes and programs you care about most.
The Community Foundation of Charles County understands our community’s most pressing issues and can help you establish a fund to make an impact in areas of need or opportunity that are important to you. Here are three great ways to turn your IRA into community good:
There is so much more we’d like you to know. To learn more, contact Gretchen Heinze Hardman at
Frequently Asked Questions
What is an IRA charitable rollover?
The provision uses the term “qualified charitable distribution” to describe an IRA charitable rollover. A
qualified charitable distribution is money that individuals who are 70½ or older may direct from their traditional
IRA to eligible charitable organizations. The provision has a cap of $100,000 for charitable distributions from
individual IRAs each year. Individuals may exclude the amount distributed directly to an eligible charity from
their gross income.
What is the new expiration date of this provision?
This provision is still time-limited. It will apply only to qualified distributions made before January 1, 2012.
Are there any substantive changes to the operations of the provision?
The only change to note is that the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act
of 2010 allows donors to make qualified charitable distributions through January 31, 2011 and elect to have
them treated as qualified charitable distributions in 2010. The Secretary of the Treasury will define how that
election is made. Recognizing that the extension of the IRA charitable rollover provision will occur so late in
2010, this change may be a particular benefit to donors who would like to take advantage of the rollover in both
2010 and 2011 but may not have time to make the 2010 distribution prior to December 31, 2010.
Does a donor also receive a charitable deduction when they roll over assets to a charity under this
provision?
No. Under this provision, donors benefit by not having to recognize the amount contributed directly from their
IRA to a qualifying charity. However, because donors exclude this contribution from their gross income, they
cannot take a charitable contribution deduction for the contribution; to do so would result in a double benefit for
donors and that is explicitly prohibited.
To which charities may donors make qualified charitable distributions?
Most contributions to public charities—other than supporting organizations—are considered qualified charitable
contributions. However, distributions from IRA accounts to donor advised funds held by public charities are
not considered qualified charitable distributions under this charitable rollover provision. (See What is a donor
advised fund? on the Council’s website.)
Individuals can make qualified charitable distributions to a private operating foundation or to a private
foundation that elects to meet the conduit rules in the year of the distribution. Neither
private non-operating foundations nor split interest trusts are eligible for special treatment as qualified
charitable distributions under the law.
Will an IRA distribution to a fund held by a community foundation qualify for this special treatment?
Yes, distributions to almost all types of funds typically held by community foundations—such as scholarship,
field-of-interest, and designated funds—qualify. The exception to this general statement is that a distribution to
a donor advised fund will not qualify for this special treatment
What if donors want to contribute more than $100,000 to a qualified charity from an IRA?
The law limits the amount that donors are able to exclude from their income to $100,000. If donors wish to take
funds from their IRA to contribute more than $100,000 to charity, they cannot exclude the additional amount
from their gross income. Rather, they must follow the general rules pertaining to percentage limitations and
itemized contribution reductions.
Can donors contribute IRA assets to a donor advised fund?
Yes. However, since such distributions do not count as qualified distributions from IRAs under these special
rules, donors will have to first recognize those distributions as income. They then must calculate their charitable
deduction according to the general rules pertaining to percentage limitations and itemized contribution
reductions discussed here.
How do individuals make a qualified charitable distribution?
Individuals must instruct their IRA trustee to make the contribution directly to an eligible charitable
organization.
To learn more, contact Gretchen Heinze Hardman at
The information provided here is based on analysis of recent legislation. Every effort has been made to ensure accuracy of the answers to these questions. However, due to the complexity of the tax law and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information may be subject to change. It is not a substitute for expert legal, tax or other professional counsel and we strongly encourage donors to work with their professional advisors to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.
©2010 Council on Foundations
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