President Obama makes IRA Charitable Rollover permanent law
President Obama has signed into law the Protecting Americans Against Tax Hikes (PATH) Act of 2015. One of many provisions made permanent by this bill is the Charitable IRA Rollover, which allows donors age 70½ and older to transfer up to $100,000 of Individual Retirement Account (IRA) assets to a public charity such as the Arizona Community Foundation—without triggering federal income taxes today or estate tax in the future.
If married, each spouse is eligible for a tax-free IRA transfer up to $100,000 per taxpayer, per year. Individuals may exclude the amount distributed directly to an eligible charity from their gross income. Under the new law, donors could potentially roll $100,000 from their IRA to charity now for the 2015 tax year, and again in January (or any time thereafter) for the 2016 tax year.
Millions of Americans continue to save pre-tax dollars in their IRAs, often amassing more than they need for daily living expenses. IRA assets are not ideal to pass to future generations, as heirs may receive less than 50 percent of IRA assets that pass through estates, according to experts. The Charitable IRA Rollover allows taxpayers to share their wealth by giving retirement savings directly to charity-and bypassing income tax.
An IRA rollover gift must be an outright gift, so it must benefit a fund where the donor is not involved. Rollover gifts can go to ACF's unrestricted Fund for the Common Good to support community grantmaking, to any field-of-interest fund, the ACF General Scholarship Fund, or a fund established to support a specific nonprofit organization in perpetuity. An IRA Rollover gift may not benefit a donor advised fund or supporting organization.
ACF's professional staff is ready to assist you in identifying the right fund to receive your IRA assets in furtherance of your charitable goals, and to begin the process in time to meet the December 31 tax year deadline. Contact one of our Senior Philanthropic Advisors at 602.381.1400 to get started.