Here’s how the IRA rollover works

• You may distribute from your IRA up to $100,000 per year tax-free through December 31, 2007, to a qualified public charity.
• You must be 70 ½ years or older at the time of the gift.
• Make the transfer directly through your IRA trustee.
• While there is no charitable deduction for an IRA charitable rollover, you may exclude the gifted amount from taxable gross income (provided the distribution would be otherwise taxable), and the IRA gift will be counted toward the minimum distribution requirements for IRAs.
• A direct distribution to charity is not a “withdrawal” that would customarily be subject to income taxation. 

Important limitation

The law does not allow contributions to donor-advised funds, supporting organizations, private non-operating foundations, life income plans and charitable lead trusts.

Existing rules for IRA gifts via bequest

Of course, it remains the case that a gift to charity of an IRA or other qualified retirement plan after your lifetime eliminates the heavy dual burden on heirs of estate tax and income tax. Families inheriting qualified plans may receive as little as fifteen cents on the dollar. In contrast, if left to charity, neither tax is imposed. 

Opportunities to achieve charitable goals

The new law may present a particularly efficient opportunity for a gift to the following programs:

• Federation’s Annual Campaign
• Federation’s Israel Emergency Campaign
• Jewish Community Endowment Fund to:
  • establish a special fund in your name
  • add to an existing fund that meets your goals, including community scholarship funds for the vulnerable — those who need financial assistance to attend Jewish preschools, day and overnight camps or day schools, or to participate in Israel experiences. (Learn more about our initiatives and scholarships.)

Please note: This information is not intended to provide legal advice, and merely conveys factual information about a law. It is not intended to be applied to an individual’s specific circumstances.  This information should not be relied upon or used by any taxpayer for the purpose of avoiding penalties that may be imposed by the Internal Revenue Service.

For more information contact:

Rita Choit Adler at 415.512.6287 or email ritaa@sfjcf.org