IRA rollover

IRA Rollover Giving from SEP or Simple IRA?

SEP IRAs and Simple IRAs are retirement accounts which small businesses create (typically for the owner of the business) – similar to 401k plans but much simpler.

This question has come to me twice in the past few weeks so it must be of interest.  Can an old enough donor make an IRA Charitable Rollover gift from his/her SEP or Simple IRA?  A client also just asked me this question where the donor said he had two SEPs (not sure why he needed two).  Here is the answer I gave:

The answer is yes, with an important caveat!

Bottom line – the SEP IRA (Simplified Employee Pension) or SIMPLE IRA could be eligible for the Charitable IRA Rollover IF the donor is 70.5 (always worth mentioning) AND the donor has not made any employer contributions to the SEP or SIMPLE IRA in this fiscal year (based on his business’ taxable year – which could be different than the calendar year). In other words, it can’t “active” to work for the IRA Charitable Roller.

To your question, your donor has two SEPs! Is one “active” and one “inactive”? I believe if one of the accounts is inactive (i.e. is not receiving any employer contributions this fiscal year), that the inactive account would be eligible to make a Charitable IRA Rollover gift from!!

Below is a blurb from the IRA website:

Q-36. Is the exclusion for qualified charitable distributions available for distributions from any type of IRA?

A-36. Generally, the exclusion for qualified charitable distributions is available for distributions from any type of IRA (including a Roth IRA described in § 408A and a deemed IRA described in § 408(q)) that is neither an ongoing SEP IRA described in § 408(k) nor an ongoing SIMPLE IRA described in § 408(p). For this purpose, a SEP IRA or a SIMPLE IRA is treated as ongoing if it is maintained under an employer arrangement under which an employer contribution is made for the plan year ending with or within the IRA owner’s taxable year in which the charitable contributions would be made.

Planned Giving in 2017?

Image result for planned giving

I refuse to jump to any conclusions regarding this year in planned giving (or any year!).

Will Congress/President somehow waterdown or eliminate the charitable deduction?

Possibly but it’s possible that the charitable deduction will be more valuable to your donors than ever before if they limit other deductions but not the charitable one.  (Treasury Secretary Mnuchin already said there will be no tampering with the charitable deduction contrary to Trump’s campaign “tax plan”)

Will there be anything new and exciting for fundraisers to bring to donors?

This doesn’t look like a great year for creative charitable legislation. Let’s see if they really “fix” Obamacare or the tax code.

But, there are a few things I can guarantee will happen: the oldest baby-boomers start turning age 71 this year, the age when required minimum distributions (RMDs) from IRAs and other qualified retirement accounts start.  There are a lot more boomers than their predecessors, with a lot more IRA funds – IRA charitable rollovers and beneficiary designations should be high on every fundraiser’s wish list.

Bottom line: Planned Giving is turning a corner, Boomers are finally and officially Planned Giving Prospects. Maybe it’s time you and/or your organization realized that it is “now or never” for the Boomers? Train up the staff, invest in the Planned Giving program.

Oh, and check out our 3-part Planned Giving Boot Camp for Major Gift Officers! Next sessions start March 15, 2017 – click here to see how affordable it is to train up to 15 staff members in planned giving!

IRA Giving Getting Closer (and Possibly Permanent!)

ppp screen shot

Thank you PPP for your announcement  – click the picture to see it.  Yes, we are inching towards an IRA giving law again but this time it looks like it will be for good (i.e. no longer up for grabs each year).

This is great news.  Sure, you have almost no time to reach your donors this year – we will be lucky if we know for sure by Friday.  But, we can get a jump on next year and beyond, and maybe get a few gifts in by year’s end.

Why I am so encouraged is that the oldest baby boomers are just starting to turn 70 in 2016 and they are prime candidates for this giving option so the fact that the law should become permanent is great news.

My planned giving boot camp students asked what are the immediate next steps (AS SOON AS IT IS SIGNED INTO LAW)?

  • Call/email anyone you know who has used the IRA giving provision in the past!
  • Email blast away!  Time sensitive headline – act by December 31 to make your tax-free IRA gifts!
  • Even if these efforts are a little late, they will certainly help for next year and beyond.
  • Start planning a post card or newsletter or more email blast or ads in your publications – anything to catch people’s attention and open their eyes to this nifty new way of giving (if they are the right age, of course!)


2012 IRA Giving Alert – Interesting Question

This morning at Planned Giving Advisors, we sent out an email with donor-ready, “cut and paste” text to alert your prospects of steps they should be considering should they be interested in IRA rollover giving this year.  We are advising that prospective IRA rollover donors consider waiting to see if the expired IRA giving law is reenacted before taking any IRA withdrawals in 2012.  This would allow anyone interested in using the IRA rollover to satisfy their Required Minimum Distribution (RDM) to preserve and utilize that important tax savings feature should the law come back into effect later in the year.

If you would like a copy of the donor-ready IRA alert, please feel free to contact Kevin Kasper at or by phone at 973-732-2455.

In response to our email alert, we received an interesting question that was worth posting:

Why not simply advise donors to have the distribution go from their IRA directly to charity in 2012.  If the rollover is reinstated it will qualify, and if it is not the distribution would be characterized as a withdrawal followed by a gift to charity.  In either case, it would qualify as their minimum distribution.

I think it is a great question, even though we didn’t take that approach.  Here is our response:

What you are saying is definitely true from a legal/tax planning perspective.  In fact, anyone even age 59 ½ and older could be encouraged to give from IRAs, take the income tax hit, and get a mostly offsetting deduction.  Why hasn’t that idea worked in practice? 

 The problem is that donors in general have never taken to the idea of making a charitable gift that will cause taxable income even though they would get a “mostly offsetting” deduction.  You can never say it is a “non-taxable” transaction because you don’t know how the extra income impacts their tax brackets – and I believe this is enough of a reason for most donors not to be interested.  The beauty of the IRA charitable rollover provision is that it creates a clear, zero tax transfer method and that apparently works for donors.

 From a marketing perspective, our approach is to put in front of prospects the most palatable options.  By asking donors to commit an IRA rollover gift before the law is reenacted, even though you can project little or no tax cost should it not be reenacted, is still a bit risky.  In face to face conversation with prospects, if they understand the risks and costs, your idea is certainly an option.  But, in an email alert, we favor sticking with options that have the least resistance from typical donors.