Recent Congressional action offers some IRA owners an opportunity for tax savings

At the last moment, Congress passed legislation to avoid the fiscal cliff. This legislation, known as the Taxpayer Relief Act of 2012, included a two-year retroactive extension of the Charitable IRA Rollover. The previous authorization of the Rollover expired at the end of 2011, but it has now been reinstated through December 31, 2013.

Specifically, the new law:

  • Retroactively reinstates the $100,000 IRA charitable “rollover” provision for 2012 and extends the provision through 2013.
  • Contains a special provision that allows qualified charitable distributions made during the month of January 2013 to be counted retroactively for the 2012 tax year. Under this provision, eligible taxpayers who make a qualified charitable distribution during the month of January 2013 can elect to have that distribution treated as if it were made on December 31, 2012.
  • Contains a special provision that allows an eligible taxpayer who has taken an otherwise qualifying distribution from an IRA during the month of December 2012 to transfer any portion of that distribution in cash to a qualifying charitable organization in January 2013 and elect to have that distribution treated as a 2012 qualified charitable distribution dated December 31, 2012.

You may take advantage of these provisions if:

  • You are 70 ½ or older at the time of your gift.
  • Your total IRA gifts to charities do not exceed $100,000.
  • Your gift must be outright. Planned gifts do not qualify.

Is this the right gift for you to make? Yes, if:

  • You are required to take a minimum distribution from your IRA, and you do not need additional income.
  • You do not itemize your deductions. IRA transfer will not be included in your taxable income even if you do not itemize your deductions.
  • You live in a state where retirement plan distributions are taxable on your state income tax return, but a charitable deduction would not be allowed.
  • You would like to make an additional charitable gift, but it would not be deductible because of the annual 50% of adjusted gross income limitation on charitable contributions. The Charitable IRA Rollover is equivalent to a deduction because it is not included in taxable income.

What steps should you take to make a gift?

  • If you received your 2012 required minimum distribution in December, and you would like to contribute all or a portion of it and not have the contributed amount included in your 2012 taxable income, simply make a cash gift indicating that it is intended to be a qualifying IRA Rollover gift.
  • If you want to make a qualifying 2013 transfer, contact your IRA administrator and instruct that person to transfer funds to the charity/charities you designate.
  • Contact Terri Bate, Director, Funds Development Ministry, at (502) 569-5628, orterri.bate@pcusa.org to ask for help in making your gift to the Camp.

The information provided in the above-described resource is not intended as a substitute for legal, accounting, or other professional advice that you may require before taking actions related to the information.  Please consult with your attorney or other advisor before taking any action..

No Comment

You can post first response comment.

Leave A Comment

Please enter your name. Please enter an valid email address. Please enter a message.