The charitable IRA rollover was originally created by the Pension Protection Act of 2006 with a two year window. It was extended through 2009, then retroactively through 2011. The recent fiscal cliff legislation includes the extension of the charitable IRA rollover for year 2013. The extension is fully retroactive to Jan. 1, 2012 and runs through Dec. 31, 2013 (with special transition rules in effect for gifts made in Dec. 2012 and Jan. 2013).
Age Limitations. Taxpayers age 70½ and older are required to make annual distributions from their IRAs which are then included in the taxpayers’ adjusted gross income (AGI) and subject to taxes. The IRA Charitable Rollover permits those taxpayers, age 70½ and older, to make donations directly to public charities from their traditional IRA or Roth IRA without counting them as part of their AGI and, consequently, without paying taxes on them.
Amount Limitation. Combined charitable IRA rollover contributions for a donor cannot exceed $100,000 in any one single tax year.
Eligible Charities. Charitable contributions from an IRA must be sent directly to a public charity that is not a supporting organization by the IRA trustee. Defining it as a public charity excludes charitable gift annuities and charitable remainder trusts.
Eligible Retirement Accounts. Rollover distributions can only be made from traditional IRAs or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are not eligible for the tax-free treatment.
Directly to the Charity. Distributions must be made directly from the IRA by the trustee and be payable to the public charity.
No Gifts in Return. In order to qualify for tax-free treatment as charitable IRA rollover, donors cannot receive any goods or services in return.
Written Receipt. Donors must obtain written substantiation of each IRA rollover contribution from each recipient charity in order to benefit from the tax-free treatment.
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Please note, individual financial circumstances will vary. The information on this site is meant as general information and does not represent legal or tax advice. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only.