Enacted in 2006, the IRA Charitable Rollover allows people aged 70 ½ or older to donate up to $100,000 of their IRA assets to a charitable organization.
It is still possible to make charitable contributions from your IRA, but the opportunity is set to expire December 31, 2013 unless the government acts to extend it – which is unlikely.
The provision originally expired at the beginning of 2010, but was reinstated as part of the 2010 Tax Act.
It was also set to expire each year since, but Congress has reinstated it every year, usually at the last minute.
This year however, it appears unlikely that the provision will be reinstated for 2014. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee said recently that this year there will be no “extenders” and each tax break will be considered on a case-by-case basis as part of overall tax reform.
It is important for those leading churches and other non-profit organizations to distribute information regarding the possible change to their members and constituents quickly, as contributions from IRAs must be received by December 31 in order to qualify.
Here are the details that you need to share with those who are in the qualifying age bracket:
- The provision allows someone 70 ½ years of age or older to donate up to $100,000 of their IRA assets to a charitable organization.
- The donor’s IRA contribution can satisfy their required minimum distribution for the year. It does not have to be counted as taxable income.
(Withdrawals from ROTH IRAs are non-taxable)
- While there is no income tax deduction for the contribution, the amount going to the charity is not included on the donor’s adjusted gross income (AGI).
- The gift is not subject to AGI percent limits on one’s charitable contributions. (You can give more than 50% of your AGI away.)
- The donor must ask the IRA custodian to make the gift directly to the charity. The gift must not pass through the donor’s possession.
- The gift must ARRIVE by December 31, 2013. It cannot simply be ‘postmarked’ by that date.
- Those who qualify to make this gift should seek counsel from their tax attorney or licensed financial planner for the details.