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IRA Charitable Rollover Gifts

A Tax-Saving Way to Help Build The New Children’s Hospital

Use Your Traditional IRA to Make Charitable Gifts

If you are 70½ years old or older, you can take advantage of a simple way to benefit the Believe Campaign to build a new Children’s Hospital and receive tax benefits in return. You can give up to $100,000 from your IRA directly to a qualified charity such as Children's Hospital at Erlanger without having to pay income taxes on the money.

This law no longer has an expiration date so you are free to make annual gifts to our organization this year and well into the future.

Qualifications

  • You must be age 70 ½ or older at the time of the gift.
  • Transfers must be made directly from a traditional IRA account by your IRA administrator to Erlanger Health System Foundations in support of the Believe Campaign.  Funds that are withdrawn by you and then contributed do NOT qualify.  Gifts from 401k, 403b, SEP and other plans do not qualify.
  • Gifts must be outright.  Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.

Benefits for the Donor

  • Can give up to $100,000
  • IRA rollover distributions are not included in your gross income for federal income tax purposes on your IRS Form 1040 (you do not receive a charitable deduction but instead reduce your taxable income)
  • IRA rollover distributions count towards your required minimum distribution for the year.

Example

Suppose Thomas is 72 years old and would like to make a gift to the Believe Campaign for Children’s Hospital at Erlanger.  He has $500,000 in his IRA and is required by law to take a minimum distribution of approximately $20,000 but does not need that income.  Thomas can authorize the administrator of his IRA to transfer $20,000 to the Erlanger Health System Foundations in support of the Believe Campaign.  The $20,000 distributed to the Believe Campaign will not be subject to federal income tax and will be counted toward Thomas’ annual required minimum distribution.  

If Thomas is in the 28% income tax bracket, he would have owed an additional $5,600 in taxes.  By taking advantage of the rollover opportunity, Thomas avoids these additional income taxes while helping Children’s Hospital at Erlanger.

Questions and Answers

H.R. 2029, the Protecting Americans from Tax Hikes Act of 2015 permanently extended the IRA Charitable Rollover. Originally passed in 2006 as part of the Pension Protection Act, the IRA Charitable Rollover allows individuals age 70½ and older to make direct transfers totaling up to $100,000 per year to 501(c)(3) charities, without having to count the transfers as income for federal income tax purposes.

Q. I'm turning age 70½ in a few months. Can I make this gift now?
A.
No. The legislation requires you to reach age 70½ by the date you make the gift.

Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A.
Yes. Direct rollovers to a qualified charity can be made only from an IRA. Under certain circumstances, however, you may be able to roll assets from a pension, profit sharing, 401(k) or 403(b) plan into an IRA and then make the transfer from the IRA directly to Erlanger Health System Foundations in support of the Believe Campaign. To determine if a rollover to an IRA is available for your plan, speak with your plan administrator.

Q. Can my gift be used as my required minimum distribution under the law?
A.
Yes, absolutely. If you have not yet taken your required minimum distribution, the IRA charitable rollover gift can satisfy all or part of that requirement. Contact your IRA custodian to complete the gift.

Q. Do I need to give my entire IRA to be eligible for the tax benefits?
A.
No. You can give any amount under this provision, as long as it is $100,000 or less this year. If your IRA is valued at more than $100,000, you can transfer a portion of it to fund a charitable gift.

Q. I have two charities I want to support. Can I give $100,000 from my IRA to each?
A.
No. Under the law, you can give a maximum of $100,000. For example, you can give each organization $50,000 this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.

Q. My spouse and I would like to give more than $100,000. How can we do that?
A.
If you have a spouse (as defined by the IRS) who is 70½ or older and has an IRA, he or she can also give up to $100,000 from his or her IRA.

It is wise to consult with your tax professionals if you are contemplating a charitable gift under this provision.  Please feel free to contact Mary Rustic at 423-778-3530 or Mary.Rustic@erlanger.org with any questions you may have.

The information on this website is not intended as legal or tax advice  For such advice, please consult an attorney or tax advisor.  Figures cited in examples are for hypothetical purposes only and are subject to change.  References to estate and income taxes include federal taxes only.  State income/estate taxes or state law may impact your results.