For those of you more than 70 and a half years old, you have been given an opportunity to pay tithe, offerings or other types of charitable gifts with pretax dollars. During our working lives, we are encouraged to save pretax dollars in retirement accounts like individual retirement accounts (IRAs). The accounts have grown tax-free, and once we reach 70 and a half, we must take withdrawals called required minimum distributions (RMD). Each withdrawal dollar is taxable income to you.
In years past, individuals 70 and a half years old and older could bypass receiving the withdrawal themselves and have the IRA custodian make the payment directly to charity. This method of gift giving was called the IRA charitable rollover.
Each year Congress had to approve this method of gifting. In December 2015, Congress passed and President Obama signed a tax bill making the IRA charitable rollover permanent.
The IRA charitable rollover is a convenient way for donors who are 70 and a half and older to make gifts to support their favorite churches and schools. Some of the details include:
- Transfers of up to $100,000 directly from an IRA to charity are allowed each year for donors age 70 and a half or older;
- An IRA rollover can be used to meet all or part of IRA-required minimum distributions;
- A charitable IRA rollover is a tax-exempt distribution because the distribution goes directly to charity; though the IRA donor does not receive a charitable deduction for the gift, they do not have to pay income tax on the distribution.
If you are interested in exploring this gifting option, please contact the NPUC or your local conference for details on how to accomplish your goals. We will be happy to share a few pieces of information you will need to provide to your IRA plan administrator to start your gift distribution. It is always exciting to create gifts for the ministries we are passionate about. It’s even more exciting to know we can do so in a more cost-effective way.