Upon reaching age 70 ½, you generally must take minimum required distributions (RMD) annually from your IRAs and other plans. If you have more money in your IRA than you need for your support, you may want to give some or all of the IRA to charity. The American Taxpayer Relief Act of 2012, dated January 1, 2013 renews the charitable IRA rollover legislation.
The Act allows individuals age 70 ½ or older, at the time of the distribution, to make a direct charitable gift from an IRA of up to $100,000 per year and not have to report the IRA distributions as taxable income on your federal income tax return.
An eligible individual can make a direct charitable gift from an IRA of up to $100,000 per year. If you own multiple IRAs from which you intend to make direct charitable gifts, the aggregate of these gifts in any one year cannot exceed $100,000. Payments directly to charitable organizations from your IRA can count toward your IRA RMD for the year. It does not, however, count toward the RMD for 401(a), 401(k), 403(b), 457(b), Keogh, SEP IRA, or other qualified plans.
To qualify, the rollover must be:
If you only hold assets in your 403(b) plan, for example, you must complete a two-step process to qualify for the charitable rollover provision:
In addition, you can make the direct charitable gift:
The charitable organization must be:
Charitable gifts under this provision must be made directly from the IRA administrator to a charitable organization. By having the IRA administrator give the money directly to the charity, you are able to exclude the IRA distribution from your income.
If the charitable organization does not send you a written acknowledgment of the direct gift, you may wish to inform the organization of your donation and request written acknowledgement of:
The charitable rollover may be particularly appealing if:
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.
The tax information contained herein is not intended to be used and cannot be used by any taxpayer for the purposes of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. Examples included herein are hypothetical and for illustrative purposes only.
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