A unique giving opportunity: IRA Rollover Gifts

Time is running out on a unique giving opportunity! Donors to The Lutheran Theological Seminary at Philadelphia (LTSP) have until the end of the year to make tax free gifts to LTSP from their IRA. For certain individuals, this opportunity is a creative strategy that can be mutually beneficial. LTSP benefits by receiving much needed funds to support the education of our students. Donors benefit by limiting taxable income.

What are the requirements?

  • An IRA rollover donor needs to have reached age 70-and-a-half.
  • Up to $100,000 may be transferred from an IRA by December 31.
  • Married couples who each have an IRA can give up to $100,000 from each IRA by December 31, thereby giving as much as $200,000.
  • A recipient charity needs to be a qualified public charity. LTSP is a qualified public charity.
  • An IRA rollover gift needs to be an outright gift — no benefits coming back to the donor (such as with a Charitable Gift Annuity or Charitable Remainder Trust, or a seat at a fundraising dinner) AND no retaining future distribution decisions (such as with a Donor Advised Fund).
  • An IRA rollover can be made from a regular IRA or a Roth IRA. An IRA rollover may be made from a SEP-IRA or a SIMPLE IRA only if the IRA owner has retired and is no longer making contributions.
  • An IRA rollover can be used to fulfill a pledge (The Brossman Center, etc.).
  • An IRA rollover qualifies for the Required Minimum Distribution (RMD) of an IRA owner.
  • Checks must be made directly to LTSP from the custodian, they cannot pass through the donor. Otherwise the distribution will count as taxable income.

How do I proceed?

  • Check with your tax advisor about whether giving from your IRA is appropriate for your situation.
  • Contact your IRA custodian to obtain any forms they may require and follow their instructions. Let your IRA custodian know that you are giving to The Lutheran Theological Seminary at Philadelphia, 7301 Germantown Ave., Philadelphia PA 19119-1794. Allow your IRA custodian to contact us at 215.248.6316 for LTSP’s federal tax ID number, if they require it.
  • Let John Puotinen, LTSP Vice President, Office for Philanthropy, know you are intending to make a rollover distribution from your IRA by calling 1.800.286.4616 ext. 6316, or email philanthropy@Ltsp.edu. Please provide information about your IRA custodian and the amount to be received so we can match paperwork and the check from your custodian.
  • Although most IRA custodians transfer IRA rollover funds directly to public charities - like LTSP - some IRA custodians issue a check payable to the charity but send the check to you (the IRA owner) for forwarding to the charity. This transaction still qualifies under the law as an IRA rollover if the check is issued payable to the charity and you deliver the check prior to December 31. Delivery may be made by physical transfer to a staff member of the LTSP Office for Philanthropy or by placing the check in the U.S. mail to LTSP by December 31.
  • Even though an IRA rollover is not included in taxable income, and consequently there is no income tax deduction, an IRA rollover donor must still comply with substantiation requirements under the federal tax code. LTSP assists in this by providing an acknowledgment letter for the IRA rollover.

What are the benefits of taking advantage of the Charitable IRA Rollover?

  • You can make a tax-favorable gift from an IRA without waiting until the end of life.
  • You can make a year-end gift, especially if you are waiting until year-end to take your IRA required minimum distribution.
  • You can give over and above the 50% Adjusted Gross Income (AGI) limit without having to carry deductions forward into subsequent years.
  • Distributions are not recognized as income, so they do not contribute to taxation of your Social Security benefits if your level of income subjects you to such taxes.
  • You get a tax benefit even if you use the standard deduction instead of itemizing deductions.

If you have questions about this opportunity or other giving options, please contact John Puotinen, Vice President, Office for Philanthropy, at philanthropy@Ltsp.edu or 1.800.286.4616 ext. 6316.

Thank you!