IRA Gifts For Your 4th Quarter

Sections of this topic

    I’m taking a hiatus from bequests to help you get IRA gifts for your year-end appeal.

    Passed on January 1, 2013, the American Taxpayer Relief Act of 2012 renewed charitable giving from individual retirement accounts (IRAs) for those 70-and-a-half or older.

    This gift opportunity ends on December 31 so the remaining months of the year are your last chance to promote it. Use the December deadline to create a sense of urgency among prospects and donors.

    Here are the requirements for a qualified charitable distribution:*

    1. Your donor is at least 70 1/2 years old on the date of gift and yours is a 501(c)(3) charity (supporting organizations are not included; nor are donor advised funds)
    2. The IRA is a traditional or Roth
    3. Maximum $100,000 per donor per year
    4. The distribution is direct from IRA to charity
    5. The full value of the gift would be eligible for an income tax charitable deduction if it were not a qualified charitable distribution
    6. The amount distributed would be included in gross income if it were not a qualified charitable distribution

    Numbers 1-4 are straightforward and what I recommend using in promotional materials. Also drop in these two points if you have space:

    First, the amount of the gift counts toward an IRA required minimum distribution, or RMD. Lots of people (though not as many as in 2007 and years before) are required to take more from IRAs than they need. This provision helps them reduce that dilemma.

    Second, the amount of the distribution to charity is not included in federal gross income, so it’s exempt from federal income tax.

    Important Fine Print
    Numbers 5 and 6 have nuances that are more appropriate to an article than a blog. They are the primary reasons your materials include a disclaimer that you’re not providing tax or legal advice and donors must consult their own advisors. The first four are secondary reasons for your disclaimer, because there are ins-and-outs in those, too.

    Here’s an important point on #5. It precludes using this to buy a ticket to your dinner or an auction item; buy anything from your charity; or fund a charitable gift annuity or charitable trust. None of these are 100% deductible for federal income tax purposes. Raffle tickets are precluded because no part of the amount paid is a charitable contribution for federal income tax purposes. (They may be deductible losses if the person has gambling winnings, but we’re not going there.)

    Get The Word Out
    You can promote qualified charitable distributions through your newsletter, direct mail or email. Talk to your board, too. These are an ideal way for donors of the right age to make their year-end gift.

    Next month I return to bequests with promotion channels beyond direct mail.

    * This is an IRA distribution, not a rollover. A rollover is a transfer from one retirement account to another retirement account.

    Tony Martignetti, Esq. is the host of Tony Martignetti Nonprofit Radio.
    He’s a Planned Giving consultant, speaker, author, blogger and stand-up comic.
    You’ll find him at
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