IRA Rollover: Frequently Asked Questions

Why should donors consider IRA rollover gifts to Rush? Susan Sasvari, senior director of gift planning, talks about why many donors are using the IRA charitable rollover to make a gift—and how you might benefit from it too.

What is a IRA charitable rollover?

The IRA charitable rollover is a special provision that allows our donors, over the age of 70½, to make a direct contribution to Rush University Medical Center and exclude this amount from their taxable income.

Why should donors consider giving IRA assets to Rush?

Many of our donors who have accumulated assets in their IRA find that the minimum required distribution significantly adds to their income and the taxes due. A direct rollover to a charity like Rush allows them to meet the requirement while avoiding the additional taxes because the distribution is not included in their reportable income. The rollover is an especially good option for people who do not itemize deductions on their tax return. As with any gift planning question, we encourage everyone to consult a financial or tax professional for advice.

Is there a limit on the amount that can be given in this way?

There is no limit on the amount you can contribute from your IRA to Rush. But the maximum amount that can be excluded from your reportable income is limited to $100,000 per taxpayer each year.

Is an IRA charitable rollover gift eligible for an income-tax charitable deduction?

No. The amount of the direct rollover is not included in taxable income, so there is no additional deduction.

Can donors make a charitable distribution from their Roth IRA?

Yes, but it’s usually more advantageous to take a tax-free withdrawal from your Roth account and then make a gift to earn a charitable deduction, if you itemize on your tax return. Since there are no taxes due on distributions from a Roth IRA, a separate gift transaction gives you an additional tax benefit.

Can donors use any tax-deferred retirement account for the charitable rollover?

No. The charitable rollover provision applies only to a traditional or Roth IRA. Other forms of retirement plans—such as 401(k) s and 403(b)s, pensions, and simple IRAs—are not eligible. But it may be possible to transfer from these other types of accounts into a traditional IRA and then make a direct charitable distribution to Rush.

How is the required minimum distribution affected by the charitable rollover gift?

Your gift amount directed to Rush through the charitable rollover will be deducted from the required minimum distribution amount and reduces or eliminates the taxable portion.

How can an IRA gift be made to Rush?

Many of our donors have found that an IRA gift is one of the simplest, easiest gifts to make. You can provide written instructions to your IRA administrator and request a direct charitable distribution to Rush. It’s important to clarify that you wish to take advantage of the IRA charitable rollover and that the distribution must be made before Dec. 31 for the specific tax year.

How else can an IRA be used to help Rush?

Assets in tax-deferred retirement funds are also ideal for a charitable bequest, and they can be an easy way to make a significant gift to Rush at a relatively small cost to your heirs. Because funds in a qualified retirement plan grow over time tax-deferred, when they are distributed, they are subject to income tax. The recipient pays this tax—either you or your beneficiaries. The combination of income and estate taxes could take a hefty bite out of your final distribution, leaving very little to family. If left to Rush, retirement-plan funds avoid any income tax since Rush is tax-exempt.

Back

© Pentera, Inc. Planned giving content. All rights reserved.