On Friday, December 18, 2016 a federal budget bill was signed into law that included provisions related to Qualified Charitable Distributions from an Individual Retirement Account (IRA). Here are a few details about what this law means for donors:
- The law makes the Qualified Charitable Distribution from an IRA (“IRA rollover”) permanent. Permanency is important because now donors can enjoy certainty and will be able to better manage their income as well as their charitable giving.
- The law also makes the IRA rollover retroactive to December 31, 2014. Gifts transferred directly from a donor’s IRA to your organization at any point during 2015 will qualify as a rollover gift. These gifts (up to the $100,000 limit) are both tax-exempt and the amount of a rollover gift can be used to meet the donor’s required minimum distribution.
IRA rollover details
The basic rules for an IRA rollover remain the same. Donors age 70½ or older can transfer up to $100,000 from their IRA to charity each year. An IRA rollover is a tax-exempt distribution from the IRA. The amount transferred can be used to meet the donor’s required minimum distribution.