IRA Charitable rollovers: Making a gift from your IRA

If you are age 70 ½ or older, own an IRA, and intend to make charitable gifts, there is good news for you to directly benefit KING FM and other organizations you care about.

In December 2015, the President signed a law to make the charitable IRA permanent with no expiration.

What does this mean?

Because of the required minimum distribution (RMD) rule, some donors find they must withdraw (taxable) funds they don’t need from their IRA. IRA charitable rollover gifts allow you to donate up to $100,000 directly from your IRA to a charitable organization without treating the distribution as taxable income and have it count toward your required minimum distribution.

Example: Suppose Jack has $500,000 in an IRA and would like to contribute $25,000 to KING FM this year. Jack can authorize the custodian of his IRA to transfer $25,000 to KING FM. He will not be subject to tax on the $25,000 distributed to KING FM. (Jack does not deduct the $25,000 gift – he has already received his tax benefit by not paying tax on otherwise taxable income.)

Making a charitable rollover gift from your IRA rather than from other assets may be especially appropriate if:

  • you do not itemize your deductions
  • you would not be able to deduct all of your charitable contributions because of deduction limitations, or
  • an increase in your taxable income may negatively impact your ability to use other deductions.

Certain limitations apply to these non-taxable charitable distributions from an IRA:

  • They cannot exceed $100,000 per person per year.
  • They must be made to a public charity such as KING FM (not a private foundation), and they cannot be to a supporting organization or a donor advised fund.
  • The gifts must be outright. For instance, they cannot be used to establish a gift annuity or fund a charitable remainder trust.
  • No goods or services, such as tickets to an event, can be received in exchange for the contribution.

To simplify the process, here are sample letters to help you facilitate your gifts:

Click here for a sample Transfer Letter to Your IRA Plan Administrator.
Click here for a sample Notification Letter to KING FM.

Contact Blandine Van de Velde Grants and Major Gifts Officer / Major Gifts at (206) 691-2975 or email: blandinev@king.org for more information. We also urge you to consult with your advisors to determine the best gift for you.