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Inside WHQR

IRA Rollover Retroactive Extension

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This post has been updated -- 12/18/14.

Congress has extended a tax break on charitable donations from individual donor's retirement accounts retroactively to January 1, 2014. The President is expected to sign this legislation.

This provision, which expired in 2013, allows individuals 70 ½ and older to donate up to $100,000 in IRA assets to a qualified charitable organization. The IRA charitable rollover is tax-free and not included in a donor's adjusted gross income.

This retroactive extension is important to donors, many of whom donate a portion of their IRA distribution each year. A gift to a charitable organization from an individual's IRA can count toward the annual Required Minimum Distribution (RMD) required by the IRS. Moreover, by reducing taxable income, the provision can help donors avoid or reduce tax implications.

Please note that WHQR cannot provide specific tax or financial advice to individuals. Please consult with your financial advisor about your situation.

Tips for Donors:

  • Consult your financial advisor about your IRA and RMD.
  • People 70 ½+ can make a gift directly to a charity from their IRA. This distribution would not be taxable as income. Because people of that age are required to take distributions from their IRAs, this kind of gift could have significant tax benefits for the donor.
  • The maximum distribution is $100,000.
  • Distributions must go directly to a charity and not to a supporting organization.
  • Distributions can only come from traditional IRAs or Roth IRAs.
  • No gifts or services must be given in return for these gifts.
  • The donor is required to obtain a written receipt from the charity for this type of gift.
  • If you decide to distribute a charitable gift from your IRA, ensure that your IRA's custodian transfer it directly from the IRA to WHQR (or other non-profit of your choice, of course).

Again -- Consult your financial advisor. But act fast!