Good News! Congress has extended the IRA charitable rollover provision…

…and because they took so long to do so, they included a provision allowing you to elect to treat direct rollovers made during January 2011 as made on December 31, 2010

The charitable IRA rollover provision allows taxpayers to make distributions directly from their IRA to charities.  Qualified charitable rollovers are not included in adjusted gross income (AGI), eliminating taxes associated with the distribution and limitations on charitable deductions. To qualify, you must be 70½ years of age or older at the time of the rollover donation and the distribution must go directly to a qualified public charity.

The IRA charitable rollover provision can help reduce taxes associated with all IRA distributions, though the greatest benefit will be received by:

• Taxpayers who do not itemize their deductions and cannot otherwise deduct charitable donations;
• Itemizing taxpayers who have reached charitable-giving limits;
• Taxpayers whose tax deductions decrease as AGI increases;
• Taxpayers whose required minimum distributions cause an increase in Medicare premiums or taxes on Social Security benefits;
• Taxpayers who live in states that do not permit tax deductions for charitable donations.

Qualifications and limitations on charitable IRA rollover: 

• The donor must be 70½ years of age or older;
• Rollover gifts may not exceed $100,000;
• Donations may only be made from traditional or Roth IRAs, not from 401(k), 403(b) or other pension plans;
• The rollover must be made directly from the custodian to the benefiting charity, at no time held by the donor;
• The donation may not be deposited into planned giving accounts such as Charitable Remainder Unitrusts or Charitable Gift Annuities.

Click here for a sample letter that you can send to your trustee, agent or broker to make an IRA Charitable Rollover. 

If you have any questions about this useful philanthropic tool, please contact:

David Michaels, Chief Financial Officer
P.O. Box 1000
250 Division St
Great Barrington, MA 01230

AIER is a public charity exempt from taxation under section 501(c)(3) of the Internal Revenue Code.  Your donations to AIER are tax deductible under IRC Section 170.