Support SPME with an IRA Rollover

IRA Charitable Rollover

A great opportunity to support the critical work of Scholars for Peace in the Middle East (SPME)!

Signed into law on January 3, 2013, the American Taxpayer Relief Act of 2012 included an extension of the IRA Charitable Rollover through 2013!  As a result, individuals age 70½ and older may distribute any amount up to $100,000 tax-free from an IRA to charities and not-for-profit entities such as SPME through December 31, 2013.

This amount will count towards an individual’s required minimum distribution for the year and will not be treated as taxable income.

SPME urges you to consult with your personal tax and financial advisors before making this or any other charitable gift.

Donors can direct IRA rollover distributions to public charities with 501(c)3 status.  They cannot direct them to private foundations, donor-advised funds, supporting organizations, or split-interest gifts (such as charitable remainder unitrusts). IRA rollover gifts provide support to nonprofits of the donor’s choice, but since they come from untaxed income, they do not offer a charitable income tax deduction. IRA rollover gifts take time and are processed by the companies holding them; be sure to request the proper forms in plenty of time to allow for distribution by December 31, 2013.

Scholars for Peace in the Middle East can accept IRA Rollover gifts for its programs and initiatives.

You should consider an IRA rollover gift if:

  • You are 70½ years of age or older.
  • You do not itemize deductions but make charitable gifts.
  • You are required to take withdrawals from your IRA but do not have an immediate or compelling need to do so.
  • Your charitable gifts already equal 50% of your adjusted gross income.

Here’s how it works:

  • You must be 70½ years of age or older.
  • You may distribute any amount up to $100,000 to one or more charities in 2013.
  • The transfer must be directly from your IRA to qualified charities; gifts to donor advised funds, private foundations, and supporting organizations are not eligible.
  • The amount rolled over from your IRA will be excluded from your gross income.
  • Your IRA rollover will count toward your minimum distribution requirement.
  • There is no federal income tax deduction for the IRA rollover gift.
  • The IRA rollover provision is effective now through December 31, 2013.

Here’s how to make your gift:

  • Direct an IRA administrator to make a gift to a 501(c)(3) charity. Click here for a form to use to initiate your charitable transfer to SPME.
  • When you make an IRA Rollover gift to SPME, please send us written instructions on the proper designation of your gift. A sample letter to send to SPME can be found here.
  • Charitable distributions under the American Taxpayer Relief Act of 2012 must be distributed as outright gifts; they may not go to donor advised funds or for a life income gift such as a charitable gift annuity.

Congress also has provided some retroactive 2012 opportunities that could provide you with some income tax savings come April 15th:

  1. Qualified charitable distributions from your IRA made by Feb. 1, 2013, may be counted for tax year 2012.
  1. If you received a distribution from your IRA in December 2012, you may subsequently make a cash contribution of that amount (or a portion of that amount) to a qualified charity before Feb. 1, 2013, and treat this as a direct charitable transfer, thus avoiding the income tax on the distribution (or portion thereof) on your 2012 return.
  1. If you made a charitable distribution at any point in 2012 from your IRA with the hopes that the provision would be made retroactive, you may now do that, as the new provision is retroactive to January 1, 2012.

Options for a transfer:

  • To roll over up to $100,000 from your Individual Retirement Account please contact your IRA administrator to request a distribution to SPME. The IRA administrator may mail a check to SPME. Please ask them to make it payable to Scholars for Peace in the Middle East. Ask your administrator to put your name on the memo line and the fact that it is a distribution from your IRA—or enclose a note to that effect. The plan administrator can mail the check to: Asaf Romirowsky, Executive Director, Scholars for Peace in the Middle East, P.O. Box 30401, Philadelphia, PA 19103.
  • Alternatively, the IRA administrator can make the check payable to Scholars for Peace in the Middle East and mail it to you. You can then mail the check to: Asaf Romirowsky, Executive Director, Scholars for Peace in the Middle East, P.O. Box 30401, Philadelphia, PA 19103.
  • If the IRA administrator wishes to transfer assets in-kind (securities or mutual fund shares), the administrator should contact Asaf Romirowsky, Executive Director, at 215-866-8811, or aromirowsky@spme.org.

Charitable Donations from IRAs for 2012 and 2013

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.

2012 QCDs Made in January 2013

An IRA owner can treat a contribution made to a qualified charity in January 2013 as a 2012 QCD in either of the following circumstances:

  • The contribution is a cash contribution to the charity of all or a portion of an IRA distribution made to the IRA owner in December 2012, provided that the contribution would have been a 2012 QCD if it had been paid directly from the IRA to the charity in 2012.
  • The contribution is paid directly from the IRA to the charity, provided that the contribution would have been a 2012 QCD if it had been paid in 2012.

IRA owners should keep records to substantiate the timing of contributions and distributions regarding any 2012 QCD made in January 2013.

A QCD made in January 2013 that is treated as a 2012 QCD will satisfy the IRA owner’s unmade 2012 RMD if the amount of the QCD equals or exceeds the 2012 RMD. However, no part of such a QCD can be used to satisfy the 2013 RMD, even if the 2012 RMD had already been made. In determining the RMD for 2013, the 2012 QCD must be subtracted from the December 31, 2012, IRA account balance(s).

Reporting

Form 1099-R – IRA trustees must report distributions as follows:

  • Distributions made in 2012 are reported on a 2012 Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; and
  • Distributions made in 2013, including any 2012 QCDs made in January 2013, are reported on a 2013 Form 1099-R.

Form 1040 – IRA owners must report 2012 QCDs made in January 2013 on their 2012 Form 1040 by:

  • including the full amount of the 2012 QCD (even if in excess of $100,000) on line 15a; and
  • not including any amount on line 15b, but writing “QCD” next to line 15b.

Note.  A 2012 QCD made in January 2013 must also be reported on the IRA owner’s 2013 Form 1040. These reporting requirements will be reflected in the 2013 Instructions for Form 1040.

IRA owners must file a 2012 Form 8606, Nondeductible IRAs, with their 2012 Form 1040 if:

  • the 2012 QCD was from a traditional IRA, there was basis in the IRA owner’s traditional IRA(s), and the IRA owner received a distribution from a traditional IRA in 2012, other than the 2012 QCD; or
  • the 2012 QCD was from a Roth IRA.

If a 2012 Form 8606 must be filed, the instructions to the form will describe how to report any 2012 QCD made in January 2013.