Charitable Donations from IRAs for 2012 and 2013

The American Taxpayer Relief Act of 2012

The American Taxpayer Relief Act of 2012 (ATRA) extended the qualified charitable distribution (QCD) provisions for 2012 and 2013.  Several special transition rules were included in ATRA to enable taxpayers to have a donation made before February 1, 2013 treated as a 2012 QCD.

A QCD is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 701/2 or over that is paid directly from the IRA to a qualified charity.  An IRA owner can exclude from gross income up to $100,000 of a QDC made for a year, and a QDC can be used to satisfy any IRA required minimum distributions (RMDs) for the year.  Also, the amount of a QDC excluded from gross income is not taken into account in determining any deduction for charitable contributions. 

Who qualifies?

Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½th birthday to make the transfer).

How much can I transfer? $100,000 per year.

From what accounts can I make transfers? Transfers must come from your IRAs directly to Manhattan College. If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to Manhattan College.

To what charities can I make gifts?

Tax exempt organizations that are classified as 501(c)(3) charities, including Manhattan College, to which deductible contributions can be made.

Can I use the rollover to fund life-income gifts (charitable gift annuities, charitable remainder trusts, or pooled income funds)?

No, these are not eligible.

Can I use the rollover to fund donor advised funds or supporting organizations?

No, these are not eligible.

Can I use the rollover to support a particular purpose of Manhattan?

As with all other gifts, you can direct your IRA Charitable Rollover gift as you see fit. However, you cannot direct your gift for a purpose from which you receive a personal benefit, goods or services in return, such as a gala ticket, to purchase items at a silent auction, etc.

How will Manhattan count the gift?

We will give you full credit for the entire gift amount.

What are the tax implications to me?

Federal: You do not recognize the transfer to Manhattan as income, provided it goes directly from the IRA provider to us. However, you are not entitled to an income tax charitable deduction for your gift.

State: Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still other states have no income tax at all.

Does this transfer qualify as my minimum required distribution?

Once you reach age 70½, you are required to take minimum distributions from your retirement plans each year, according to a federal formula. IRA charitable rollovers count towards your minimum required distributions for the year.

What is the procedure to execute an IRA charitable rollover?

To complete an IRA charitable rollover, the first step is to contact your IRA provider to learn their procedures. We also offer a sample letter you can send to your IRA provider to initiate a rollover. Make sure that you contact us when you direct the rollover so we can look for the check from your IRA provider.

For more information contact Mary Ellen Malone at 718-862-7976 or mary.malone@manhattan.edu.