Congress made this benefit available through the the American Taxpayer Relief Act of 2012 and extended the benefit to 2013. These tax free gifts are limited to $100,000. Without the rollover, the law would require you to report as taxable income the amount taken from an IRA and given to charity.
How You Qualify:You must be age 70 1/2 when you make the gift. (Example: If you turn 70 1/2 on November 1, 2013, wait until then to make the gift.)
The transfer must be directly from your IRA to Litchfield Performing Arts, Inc., a qualified charity under the statute. (The law does not allow charitable IRA rollover gifts to donor advised funds, supporting organizations or private foundations.) The tax benefit does not apply if you transfer funds from our IRA to your personal bank account and then to us.
The law only applies to IRAs. No other retirement plans qualify.
You benefit by paying no taxes on the funds sent to us directly from your IRA. The government does not allow a double tax benefit so you cannot claim a charitable deduction from your taxable income on your gift. The rollover is tax free to you. It is neither taxable income to you nor a tax deduction.
Even better, you may use the donation towards satisfying your IRA mandatory minimum distribution requirement.
You benefit by knowing your generosity will help sustain our dedication to children and to music.
Jean is over 70 1/2 years old. Jean calls her IRA custodian who informs her that her mandatory minimum distribution for 2013 is $ 5,500. Jean directs her IRA custodian to transfer $ 5,500 directly from her IRA to Litchfield Performing Arts, Inc. no later than December 31, 2013. Jean has met her 2013 mandatory distribution requirement of $5,500 and pays no income taxes on her gift. The transaction is tax free. However, she cannot deduct the gift from her federal income taxes. Jean’s generous gift can provide full scholarships to send two students to the Litchfield Jazz Camp for two weeks each.
Bruce turns 70 1/2 on December 1, 2013. He directs his IRA custodian to transfer $2,000 to Litchfield Performing Arts, Inc. after December 1, 2013 but before the first of the new year. Bruce’s mandatory distribution requirement is $2,500. Bruce’s donation is tax free, but he cannot deduct the gift from his federal income taxes. His $2,000 gift counts towards his mandatory minimum distribution of $2,500. His generous gift can provide a full, two-week scholarship for one student with funds left over for and a partial scholarship for a second student.
How to Make the Gift:
We encourage you to contact your tax professional for advice about your personal situation.
For more information, please feel free to contact Vita Muir at 860-361-6285 or firstname.lastname@example.org. And, please contact us when you have made your gift!!