Charitable IRA Rollover— Reinstated

By: Laurie Valentine- COO & Trust Counsel

The recently enacted American Taxpayer Relief Act (“ATRA”) reinstated the IRA Charitable Rollover giving opportunity through the end of 2013.

Generally, IRA owners must report distributions out of their IRA as income, whether they receive the IRA funds or direct them to someone else. And, while an IRA distribution to charity is a charitable contribution for income tax deduction purposes (if you itemize); the increase in reportable income and restrictions on the amount of charitable gifts that may be deducted in a given year may not result in a “wash” for tax purposes.

The Charitable IRA Rollover provisions are an exception to the general rule. They permit a person who is 70 ½ or older to make tax-free outright gifts in any amount up to a total of $100,000 during 2013 from a traditional or Roth IRA to qualified charities. Your church and our KBC and SBC agencies and institutions are “qualified charities”. Private foundations and donor advised funds are not.

The distributions must be made directly from your IRA to the qualified charitable organization. A distribution to the IRA owner/donor, followed by a gift to charity, does not receive the special treatment provided by ATRA.

A Charitable IRA Rollover distribution is not included in the income of an age 70 ½ or older IRA owner, but it does count as part of their required minimum distribution. And, while it is a gift to charity, it is not a deductible charitable contribution for income tax purposes.

For those age 70 ½ with IRA assets, make sure you take a look out this “window of opportunity” before it closes on December 31, 2013.

For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.