Planned Giving

Did you know that you can make a difference in the lives of men, women and children through planned giving? In addition there may be some Tax Benefits to you through this type of giving. Here are some suggestions to discuss with your financial planner or tax consultant.

Planned gifts that can help now:

Gifts of securities (broadly defined as Stocks and Bonds)
Gifts of real property
Charitable Lead Trust – which can provide a stream of income to Refuge of Hope
Charitable IRA Rollover

The purpose of this Charitable IRA Rollover section is to provide general gift, estate, and financial planning information. It is not intended as legal, accounting, or other professional advice. For assistance in planning charitable gifts with tax and other financial implications, the services of appropriate advisors should be obtained. Consult an attorney for advice if your plans require revision of a will or other document.

The Charitable IRA Rollover allows individuals age 70½ and older to make direct transfers of up to $100,000 per year from individual retirement accounts to qualified charities without having to count the transfers as income for federal tax purposes. Since no tax is incurred on the withdrawal, gifts do not qualify for an income tax charitable deduction, but are eligible to be counted toward an individual’s minimum required distribution.

Provisions of the Charitable IRA Rollover:

  • Distributions must be made directly to a qualified charity like Refuge of Hope by the plan administrator of an IRA. Retirement assets in 401(k), 403(b), SEP, or SIMPLE plans do not qualify but may be rolled into a new or existing IRA and transferred to the charity.
  • Distributions may only be made to 501(c)(3) tax exempt organizations and cannot be made to donor advised funds, private foundations, or supporting organizations.
  • Distributions may not be used to fund life-income gifts such as charitable gift annuities, charitable remainder trusts, or pooled income funds.

How to Donate

Contact Jo Ann Carpenter, Director of Development, at (330) 280-2153 or jcarpenter@refugeofhope.org for instructions on how to complete a Charitable IRA Rollover.

Frequently Asked Questions

What is a Charitable IRA Rollover?
The Charitable IRA Rollover, or qualified charitable distribution (QCD), is a special provision allowing certain donors to exclude from taxable income—and count toward their required minimum distribution—certain transfers of Individual Retirement Account (IRA) assets that are made directly to public charities, including Refuge of Hope. Since it was first made available in tax year 2006, many donors age 70 1/2 or older have used this popular option to support the areas of their choice with tax-wise gifts ranging from $100 to $100,000.

How does this help me?
A Charitable IRA Rollover makes it easier to use IRA assets, during lifetime, to make charitable gifts.

Why will lifetime IRA gifts be easier?
Under current law, withdrawals from traditional IRAs and certain Roth IRAs are taxed as income, even if they are immediately directed to a charity. The donor receives an income tax deduction for his or her donation, but various other federal, and sometimes state, tax rules can prevent the deduction from fully offsetting this taxable income. As a result, many donors have chosen not to use IRA assets for lifetime gifts. The charitable IRA rollover eliminates this problem.

What gifts qualify for a Charitable IRA Rollover?
A gift that qualifies, technically termed a “qualified charitable distribution,” is:

  • Made by a donor age 70 1/2 or older.
  • Transferred from a traditional or Roth IRA directly to a permissible public charity, such as Refuge of Hope. (If giving in this manner, please tell your broker or fund manager to name you as the donor on the transfer.)
  • Completed during the applicable tax year.

Is there a limit on the amount that can be given?
Yes, there is a limit. An individual taxpayer’s total Charitable IRA Rollover gifts cannot exceed $100,000 per tax year.

What about the required minimum distribution?
If you have not already taken your required minimum distribution in a given year, a qualifying rollover gift can count toward satisfying this requirement.

Is an income tax deduction also available?
No. The gift would be excluded from income, so providing a deduction in addition to that exclusion would create an inappropriate double tax benefit.

Why are Roth IRAs included? Aren’t withdrawals from a Roth IRA tax-free?
Withdrawals from a Roth IRA may be tax-free only if the account has been open for longer than five years or if certain other conditions apply. Otherwise, withdrawals are taxed as if they came from a traditional IRA. Therefore, certain Roth IRAs could benefit from a Charitable IRA Rollover.

Can other retirement plans, such as 401(k) and 403(b) accounts, be used?
No. However, it may be possible to make a tax-free transfer from such other accounts to an IRA, from which a charitable rollover can then be made.

Is my IRA charitable rollover gift eligible for an income tax charitable deduction?
No. Donors of qualified IRA gifts do not receive a federal income tax charitable deduction for the IRA gift, as they are not being taxed on the withdrawal.

Can a gift be made to any charity?
No. Excluded are:

  • Donor advised funds;
  • Supporting organizations; and
  • Private foundations.

Who can benefit from using the charitable IRA rollover to make a gift?

  • People with significant assets in an IRA.
  • People making gifts that are large, relative to their income. (Because a charitable rollover is not included in taxable income, it does not count against the usual percentage limitations on using income tax charitable deductions.)
  • People who do not itemize.

Can a rollover gift be used to pay my pledged support to Refuge of Hope?
Yes. You can honor your pledge to Refuge of Hope with one or more qualified Charitable IRA Rollover transfers of up to $100,000 per person, per calendar year.

Can a rollover gift be used to fund a charitable remainder trust or charitable gift annuity?
No. The donor cannot receive any benefits in return for the gift. This includes life income plan payments.

Are there any benefits that a donor can receive?
The only permissible benefits from a Charitable IRA Rollover gift are those that would not reduce the tax deduction for which the donor would have otherwise qualified. At Refuge of Hope, a charitable IRA rollover gift is allowed to count toward naming opportunities.

What if a withdrawal does not meet the requirements of a Charitable IRA Rollover?
It simply will be included in taxable income as other IRA withdrawals currently are.

Is the Charitable IRA Rollover right for everyone?
While this is a great option, other types of gifts may provide donors with more tax benefits. As with any gift planning question, donors should consult their tax professionals for specific advice.

Can I still make a gift with an IRA beneficiary designation?
Absolutely. Whether or not you choose to make a Charitable IRA Rollover gift, you can still designate Refuge of Hope as a beneficiary to receive IRA assets after your lifetime. The lifetime Charitable IRA Rollover is simply another option for donors who would like to see their philanthropy at work now.

If I made a Charitable IRA Rollover gift in other tax years, can I do this again for the current tax year?
Yes. The current law extends the Charitable IRA Rollover provision indefinitely—with no expiration date—allowing individuals to make qualifying gifts every tax year.

May I make a gift from my IRA if I have already taken my required minimum distribution (RMD)?
Yes. You can exclude up to $100,000 (per IRA account owner) from gross income for qualified charitable donations. The donation counts toward your RMD but is not limited by your RMD.

Are there other tax advantages to gifting through a qualified IRA?
Yes. Qualified IRA gifts are not subject to percentage of adjusted gross income (AGI) limitations for charitable contributions and are not reportable as income for federal income tax or for Social Security income purposes. The amounts withdrawn are not subject to state income taxes in most states. Donors who do not itemize deductions on their federal income tax returns may benefit from qualified IRA gifts for their exclusion from gross income. Amounts withdrawn from an IRA account are removed from the donor’s taxable estate. Talk to your tax advisor to see which benefits apply to your specific situation.

Are IRA distributions already taken by me eligible to gift as qualified charitable distributions? 
No. However, you can make gifts from IRA distributions that do not meet the requirements of a qualified charitable distribution. In such cases, the IRA distribution would be recognized as income for income tax purposes and typically would be eligible for a federal income tax charitable deduction.

What the new Tax Reform means to you:
As of January, 2018, the changes in the federal tax law provide the potential for tax savings to certain taxpayers depending on how they choose to make their charitable contributions. The new standard deductions are $12,000 for a single taxpayer and $24,000.00 for a married couple filing jointly, and an additional $1,400 deduction for people who are 65 or older, blind, or disabled. With the increase in the standard deduction, it may be beneficial for a taxpayer, particularly a married couple filing jointly, to take the standard deduction rather than itemize the deductions as they have done in the past. In addition to the change in the standard deduction there have also been certain changes made to all categories of itemized deductions with the biggest change being the limitation on state, local and real estate taxes of $10,000. With this limitation, you might find that the standard deduction, particularly for married couple filing jointly, will now be higher than itemized deductions and therefore it is more beneficial to that the standard deduction.

Example of how it may save you taxes depending on how you make your charitable contributions:
This is particularly true if the taxpayer has an IRA and is older than 70 ½ and is required to take a minimum distribution from the IRA account. Under this scenario the taxpayer can make his or her charitable contributions out of the IRA account, thereby reducing taxable income while still having the benefit of the standard deduction of $26,600 as a couple. For example, if the required minimum distribution (RMD) is $80,000, and you use the fund to make charitable contributions of $15,000, the taxable income would be $65,000. You now reduce that amount by the standard deduction for a married couple of $24,000, reducing your taxable income to $38,000. At a tax rate of 15% the tax to be paid would be $5,760.

On the other hand, if you itemize your deductions, using the same amount of charitable deduction, and adding another $15,000 after deductions, your total deductions would be $30,000 reducing your taxable income from $80,000 RMD to $50,000. Using a taxable rate of 15%, your taxes would be $7,5000. Under this example, paying your charitable gifts out of you RMD would save you $1,740 in federal taxes. Your state tax would also be lower. You could either put that money in your pocket, or increase your charitable deductions by the amount that you saved. Before going forward with any attempted payout from your RMD, make sure you work with the broker holding your IRA to make sure that any distributions for charities are done in the proper way to qualify.

Planned gifts that can help later:

Wills and trusts
Gifts of Insurance
Remainders from Qualified Retirement Plans

More questions?
Contact Jo Ann Carpenter, Director of Development, at (330) 280-2153 or jcarpenter@refugeofhope.org.