A board member of The Community Foundation once observed that “the only good thing about turning 70.5 was the IRA Charitable Rollover.”
Congress introduced the IRA Charitable Rollover in 2006 as part of the Pension Protection Act (PPA). It was an effort to help reduce taxes and promote charitable giving, but was never permanent until 2016. The concept is straightforward:
- Individuals with IRAs must take required minimum distributions (RMD) the year they turn 70.5, even if they don’t need the income. This income is taxable.
- The Charitable Rollover allows IRA account holders to donate up to $100,000 of their RMDs directly to nonprofit organizations and avoid having this amount treated as income.
The Community Foundation of Middle Tennessee is here to help.
Since 2006, donors have turned to The Community Foundation to initiate the IRA Charitable Rollover. The process is quick and easy:
- Have a conversation with The Community Foundation staff to determine which fund type can help you achieve your charitable goals. All fund types — except Donor-Advised funds — are options.
- Contact your IRA administrator to request the donation of your RMD. Most firms require a few simple steps: 1.) provide The Community Foundation’s contact information and Federal Tax ID and 2.) a signature on necessary documents.