In 2015 Congress finally made permanent the law allowing Charitable IRA Rollovers from traditional IRA’s. This is good news for people who don’t need their Required Minimum Distribution (RMD) and would like to avoid paying the additional income taxes on their IRA distributions. Because this law is now permanent, this is a good time to review the rules.

Those over 70 ½ years of age are now allowed annual direct transfers from their Traditional IRA up to $100,000 to any qualifying charitable organization, such as Habitat for Humanity Central Arizona. This is an easy, tax advantaged way for you to make annual gifts to all of your favorite charitable organizations.

But here’s the really good part… the Charitable IRA Rollover can automatically satisfy your required minimum distribution (RMD) for the year. That’s a real advantage for a charitably minded IRA owner who doesn’t need their RMD for living expenses.

So why should you consider making your charitable gifts directly from your IRA rather than taking the money out as income first and then making your donations?

It’s because all IRA distributions taken by the owner of the account are taxable and must be included in your adjusted gross income and as a result:

  • Income taxes on your Social Security benefits might increase
  • The additional income might bump you into a higher tax bracket.
  • And it might also increase the cost of your Medicare Insurance.

The Charitable IRA Rollover can help you avoid these problems while allowing you a charitable deduction that can reduce your federal tax liability.

So please consider consulting your tax advisor to review your situation. You can contact us by phone, 602-268-9022 ext. 231 or email at jim@habitatcaz.org and I will be pleased to answer any questions you may have about the transfer process.

Remember, qualifying direct transfers must occur prior to December 31 in order to apply to your 2016 tax filing.

Making the Contribution

To make your gift, simply instruct your IRA trustee or custodian to make a transfer from the IRA directly to us by sending a check made out to Habitat for Humanity Central Arizona. Your IRA trustees and custodians should have forms and procedures in place to make this transfer easy for you.

Remember, it won’t qualify if the trustee or custodian makes the mistake of putting IRA money into a non-IRA account of yours as an intermediate step. It also won’t qualify if the check is made out to you. The law doesn’t provide a way to correct mistakes so contact us if you have questions.

After we receive the distribution we will provide you with a written acknowledgment that you will need to claim a charitable income tax deduction.

We appreciate you helping us support local families in need of affordable housing!  Thank you for your ongoing kind and generous support of Habitat for Humanity Central Arizona. We are grateful to count you among our friends.

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