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Charitable IRA Rollover FAQs


IRA Alert

On December 16, 2014, the Senate passed HR 5771 which included a one year extension of expired tax provisions retroactive to January 1, 2014. This reauthorizes the IRA charitable rollover through December 31, 2014. Donors age 70 1/2 and older may transfer up to $100,000 from their IRA to a qualified public charity. The transfer will be made free of federal income tax and the gift qualifies for the donor's 2014 required minimum distribution (RMD). The President still needs to sign this bill. If you are interested in making a gift to Mount St. Mary’s via an IRA Rollover please keep in mind that it often takes IRA administrators several weeks to process rollover transactions. In order to complete the gift by year end, we suggest you contact your IRA administrators right away to find out more about this process.


Frequently Asked Questions

  1. Who can exclude IRA distributions from taxable income?
  2. How much can I give and still take advantage of the tax-free benefits of the new laws?
  3. My spouse is also a Mount St. Mary's University graduate. Can we both take advantage of the charitable rollover option in the same year?
  4. If I give to Mount St. Mary's University using funds from my IRA, do I qualify for a tax deduction on that amount?
  5. If I elect to make a qualified charitable distribution to Mount St. Mary's University from my IRA, will I be required to itemize my deductions at tax time?
  6. Can I use funds withdrawn from other qualified tax-deferred retirement accounts such as a 403(b) or 401(k) type plan?
  7. Do I have to pay capital gains tax on the amount that I give to Mount St. Mary's University from my IRA?
  8. Can I use the qualified charitable distribution to create a trust or gift annuity or another life income agreement from which I would benefit?

► Who can exclude IRA distributions from taxable income?
The exclusion applies to individuals who have reached age 70 ½ by the date of their contribution.

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► How much can I give and still take advantage of the tax-free benefits of the new laws?
The maximum amount that can be excluded from an IRA owner's income is limited to $100,000 per taxpayer year.

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► My spouse is also a Mount St. Mary's University graduate. Can we both take advantage of the charitable rollover option in the same year?
Yes. The amount that can be excluded from income is limited to any amount up to $100,000 per taxpayer. As a married couple you can together donate up to $200,000 provided that each of you owns at least one or more IRA's and has reached age 70 ½ .

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► If I give to Mount St. Mary's University using funds from my IRA, do I qualify for a tax deduction on that amount?
No. The Charitable IRA Rollover allows individuals to avoid paying income taxes that were never paid when the funds when deposited.

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► If I elect to make a qualified charitable distribution to Mount St. Mary's University from my IRA, will I be required to itemize my deductions at tax time?
No. If you are part of the nearly 60% of taxpayers who elect the standard deduction at tax time, this new giving option will not change that for you. However, if your account includes non-deductible contributions, you may be able to take a charitable deduction on that amount. To guarantee the most favorable tax treatment of your donated IRA assets, please consult your financial advisor.

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► Can I use funds withdrawn from other qualified tax-deferred retirement accounts such as a 403(b) or 401(k) type plan?
No. The provision only provides a benefit for owners of an IRA or Roth IRA. Other forms of retirement plans such as 401(k) and 403 (b) annuities, defined benefit and contribution plans, profit sharing plans, Keoghs, and employer-sponsored SEP's and SIMPLE plans are not eligible.

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► Do I have to pay capital gains tax on the amount that I give to Mount St. Mary's University from my IRA?
No.

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► Can I use the qualified charitable distribution to create a trust or gift annuity or another life income agreement from which I would benefit?
No. Only outright cash gifts qualify for this benefit. As stated in the provision, "The exclusion from income applies only if a contribution deduction from the entire distribution otherwise would be allowable (under present law), determined without regard to the generally applicable percentage limitation." Thus, split interest gifts of any type do not qualify.

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If you have other questions about gifts of retirement assets contact Mount St. Mary's University Gift Planning office today.

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