Take Advantage of Year-End Giving Opportunities for Tax-Free IRA Transfers

Guest Blog: Marva J. Brooks, Esquire & Community Foundation Trustee

As the end of the year approaches, so, too, does a deadline for the individual retirement account (IRA) charitable rollover. Such an IRA transfer is a charitable giving opportunity made possible through legislation set to expire this year. It allows individuals to donate a portion of their IRA to charity, without treating the assets transferred to the qualifying charity as income.

Through December 31, 2013, people 70 ½ or older can give up to $100,000 of their IRA to a qualifying charitable organization tax-free, under the American Taxpayer Relief Act of 2012, signed into law by President Obama last year. The opportunity was originally permitted by the Pension Protection Act of 2006. It does not appear that the expiring law will be extended by Congress as it did with the previous law.

The law describes an IRA charitable rollover as a “qualified charitable distribution” of money that individuals may direct from their traditional IRA to eligible charitable organizations such as the Community Foundation of the Lowcountry. Individuals may exclude from their gross income for 2013 the full amount distributed directly to charity. No charitable deduction may be taken for the gift, but the amount of the charitable rollover will qualify for all or part of the IRA owner’s 2013 required minimum distribution from the IRA.

This soon-to-expire opportunity can be facilitated through the Community Foundation of the Lowcountry’s tailor-made charitable services. Through these services, donors have several options to establish a charitable fund to support charitable causes, now and beyond their lifetimes. The Community Foundation can work with donors of an IRA to create scholarship funds or funds designated to benefit favorite charities, address particular needs, memorialize a loved one, and more.

Here are four specific ways the Community Foundation of the Lowcountry can work with donors to turn an IRA into charitable resources to support the issues and organizations they care about most and help them meet their charitable goals:

• Designated Funds: These funds support one or more specific organizations of the donor’s choice, such as a nonprofit group(s), school or congregation or any qualifying nonprofit organization. The organizations are specified at the inception of the fund.

• Scholarship Funds: These funds help students pursue and achieve their academic goals and may have merit or need-based criteria, and can be designed to assist students from a certain school, a designated community, or those entering specific fields of study.

• Field of Interest Funds: Field of Interest Funds allow donors to target their gift to support charitable causes important to them, such as arts, education, health services and more, and can support multiple local nonprofits.

• The Community Foundation’s Touch Tomorrow Lowcountry Endowment Fund: A fund designated to provide support for pressing unmet needs in Beaufort, Jasper, Hampton and Colleton Counties.

One special note, a distribution to a donor advised fund or to establish a charitable remainder trust or charitable gift annuity does not qualify for tax-free IRA transfers.

As always, donors should consult with their professional advisors for legal, tax or other professional advice. Don’t let this special opportunity to redirect IRA assets to support your philanthropic interests pass by without learning how the Community Foundation can assist you with your charitable giving.

To learn more about the IRA charitable rollover expiring December 31, 2013, contact Emmy Rooney, Vice President for Development and Donor Services, at 843.681.9100 or by email: erooney@cf-lowcountry.org. Learn more about giving options at the Community Foundation: http://www.cf-lowcountry.org