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IRA Charitable Rollover

The IRA Charitable Rollover, first enacted by Congress in 2006, expired in 2009. However, in the new tax bill just signed by President Obama, this rollover provision has been extended through 2011. Persons can even make 2010 contributions as late as January 2011. 

The new law provides that in each of the years 2010 and 2011, an owner of a traditional or Roth IRA who is 70.5 or older may instruct the trustee of the IRA to distribute to a qualified charity up to $100,000 without the distribution being included in taxable income, and that the distribution will count toward the IRA owners mandatory withdrawal amount.

Recognizing that there is little time left to take advantage of this extension in 2010, the new law allows donors to elect to treat IRA rollover gifts made in January 2011 as if they were made on December 31, 2010. This would allow an individual to make gifts up to $200,000 (or couples to make gifts up to $400,000) between now and the end of 2011 by fully utilizing both their 2010 and 2011 extensions.

Millions of dollars have been given this way by persons who had excess IRA monies. Previously, persons who withdrew these funds for gifts would be penalized by having the money taxed as ordinary income. As in the past, these funds must be directly transferred to the charity, but a donor's IRA administrator and tax advisor will be well aware of how to make that happen.

This has received little publicity, so we wanted to make you aware of it. The Charitable Rollover allows those who aren’t able to itemize on their tax return to take a deduction for a charitable donation. 

For additional information, please contact our church office at 520.297.2062 or e-mail us.