Towards the end of last year Congress voted to make the IRA Charitable Rollover benefit a permanent law, which gives you a great tax-free benefit, while at the same time supports DANK Haus German American Cultural Center.
Under the rollover provisions donors age 70 1/2 or older are able to contribute up to $100,000 annually from an IRA account and avoid federal tax consequences. When the amount withdrawn from the IRA account is paid directly to the charity, it is not counted as federally taxable income. In addition, the IRA charitable gift amount counts against the donor's required minimum distribution (RMD).
Always consult a tax professional when thinking about making a major charitable gift or a gift under this law. IRA custodians may send your gift to:
DANK Haus German American Cultural Center
4740 North Western Avenue
Chicago, IL 60625
Our federal tax ID number is 36-2656050
Frequently Asked Questions
What is a charitable IRA rollover?
The charitable IRA rollover, or qualified charitable distribution (QCD), is a special provision allowing certain donors to exclude from taxable income -- and count toward their required minimum distribution -- certain transfers of Individual Retirement Account (IRA) assets that are made directly to public charities, including DANK Haus German American Cultural Center.
How does this help me?
A charitable IRA rollover makes it easier to use IRA assets, during lifetime, to make charitable gifts.
Why will lifetime IRA gifts be easier?
Under current law, withdrawals from traditional IRAs and certain Roth IRAs are taxed as income, even if they are immediately directed to a charity. The donor receives a tax deduction for his or her donation, but various other federal, and sometimes state, tax rules can prevent the deduction from fully offsetting this taxable income. As a result, many donors have chosen not to use IRA assets for lifetime gifts. The charitable IRA rollover eliminates this problem.
What gifts qualify for a charitable IRA rollover?
A gift that qualifies, technically termed a “qualified charitable distribution,” is:
Made by a donor age 70 1/2 or older
Transferred from a traditional or Roth IRA directly to a permissible public charity, such as DANK Haus German American Cultural Center. (If giving in this manner, please tell your broker or fund manager to name you as the donor on the transfer and advise that DANK Haus is a 501c(3) organization (Federal Tax ID: 36-2656050).
Completed during the applicable tax year
Is there a limit on the amount that can be given?
Yes, there is a limit. An individual taxpayer's total charitable IRA rollover gifts cannot exceed $100,000 per tax year.
What about the required minimum distribution?
If you have not already taken your required minimum distribution in a given year, a qualifying rollover gift can count toward satisfying this requirement.
Is an income tax deduction also available?
No. The gift would be excluded from income, so providing a deduction in addition to that exclusion would create an inappropriate double tax benefit.
Why are Roth IRAs included? Aren't withdrawals from a Roth IRA tax-free?
Withdrawals from a Roth IRA may be tax-free only if the account has been open for longer than five years or if certain other conditions apply. Otherwise, withdrawals are taxed as if they came from a traditional IRA. Therefore, certain Roth IRAs could benefit from a charitable IRA rollover.
Can other retirement plans, such as 401(k) and 403(b) accounts, be used?
No. However, it may be possible to make a tax-free transfer from such other accounts to an IRA, from which a charitable rollover can then be made.
Can a gift be made to any charity?
No. Excluded are:
Donor advised funds
Who can benefit from using the charitable IRA rollover to make a gift?
- Persons with significant assets in an IRA
- Persons making gifts that are large, relative to their income. (Because a charitable rollover is not included in taxable income, it does not count against the usual percentage limitations on using charitable deductions.)
- Persons having so few deductions that they choose not to itemize
Can a rollover gift be used to fund a charitable remainder trust or charitable gift annuity?
No. The donor can receive no benefits in return for the gift. This includes life income plan payments.
Are there any benefits that a donor can receive?
The only permissible benefits from a charitable IRA rollover gift are those that would not reduce the tax deduction for which the donor would have otherwise qualified.
What if a withdrawal does not meet the requirements of a charitable IRA rollover?
It simply will be included in taxable income as other IRA withdrawals currently are.
Is the charitable IRA rollover right for everyone?
While this is a great option, other types of gifts may provide donors with more tax benefits. As with any gift planning question, donors should consult their tax professionals for specific advice.
Can I still make a gift with an IRA beneficiary designation?
Absolutely! Whether or not you choose to make a charitable IRA rollover gift, you can still designate DANK Haus German American Cultural Center as a beneficiary to receive IRA assets after your lifetime. The lifetime charitable IRA rollover is simply another option for donors who would like to see their philanthropy at work now.
If I made a charitable IRA rollover gift last year, can I do this again this tax year?
Yes. The current law extends the charitable IRA rollover provision indefinitely -- with no expiration date -- allowing individuals to make qualifying gifts every tax year.
Is my IRA charitable rollover gift eligible for an income tax charitable deduction?
No. Donors of qualified IRA gifts do not receive a federal income tax charitable deduction for the IRA gift, as they are not being taxed on the withdrawal.
Are gifts from retirement plans such as 401(k), 403(b), SEP, or SIMPLE eligible?
No. However, donors may be able to make qualified transfers from their pension or retirement plan to their IRA, and then make a charitable gift from their IRA account