IRA Charitable Distribution

Did you know that anyone age 70 ½  or above may transfer up to $100,000 each year directly from an IRA (an Individual Retirement Account) to 501 (c)(3) organizations like the American Museum of Natural History, without having to report the distributed amount as taxable income? In 2015, Congress permanently extended this charitable incentive—something that is referred to as a "Charitable IRA Rollover" or an IRA Charitable Distribution.

Who will benefit from making an IRA Charitable Distribution?

In general, donors who:

1. have a traditional IRA
2. are age 70 ½ or above and must take a required distribution from the IRA
3. want to make gifts to charitable organizations like the Museum

In addition to helping the Museum, an IRA Charitable Distribution may have tax benefits. After age 70 ½, you may be required to take distributions of taxable income from an IRA. With the “charitable rollover” you distribute $100,000 directly to a charitable organization from your IRA. Since it is not included in your Adjusted Gross Income (AGI), it is not subject to income tax. For some, the lower AGI can have an even greater tax benefit than the charitable deductions they take.

Benefits of an IRA Charitable Distribution will be most attractive if:

1. you don’t need income from your IRA this year—but are required by law to take distributions, and don’t like the idea of being taxed on them
2. you don’t itemize your deductions, but could benefit from lowering your AGI through a mechanism that does not require an itemized return
3. you are concerned about increasing your AGI, because it could push you into a higher tax bracket

To qualify, the distribution must come directly from the IRA provider to the Museum and the Museum may not provide any goods or services in exchange. Below are downloadable sample letters that may help you arrange a distribution to the Museum. One letter is to your IRA provider. The other notifies the Museum.

Sample Letter to Provider »    Sample Letter to the Museum »

While the American Museum of Natural History does not provide specific tax or legal advice, we do share information about charitable options with our donors. Please consult your own advisor about your specific situation. If you have general questions about charitable gifts such as this, call John Matthews at 212-769-5119.