The IRA Charitable Rollover

The IRA Charitable Rollover is once again an option for our donors.  Congress first made the IRA Charitable Rollover available in 2006, but only for a limited time.  Fortunately, Congress renewed this option for 2010 and 2011.  Now a donor can order a distribution from an IRA directly to the Foundation.  And the money directed to the Foundation is excluded from the donor’s income for federal tax purposes, and counts towards the donor’s required minimum distribution for that year. 

 Here are the highlights of the IRA Charitable Rollover:

• The IRA Chaitable Rollover provision is in effect for 2010 and 2011.
• Donors must be 70 ½ or older on the date of the distribution in order to participate.
• Donors direct the distribution to a qualified charity.
• The donor may exclude up to $100,000 per year with the IRA qualified charitable distribution.
• The donor can count the amount of the distribution towards his/her Required Minimum Distribution for the IRA – that is the amount he/she is required by law to take from qualified retirement plan accounts every year.
• The donor will receive a 1099-R form from the IRA trustee to report the distribution.  On the federal 1040 income tax return, the donor lists the qualified charitable distribution as non-taxable.

After consulting your financial and tax advisors to see whether the IRA Charitable Rollover is right for you, the next step is to contact the trustee of your IRA account and request the qualified charitable distribution.  Most IRA custodians are aware of the change in the tax law and may have a written form for you to complete the transfer.  Otherwise, you must send a written request to your trustee.

Also, be sure to contact the Foundation to let us know to expect a distribution from your IRA account.  Because the qualified charitable distribution requires substantiation just like a normal gift, we want to send you an acknowledgment that we have received the noted funds. 

To learn more about how the IRA Charitable Rollover fits into your plans, talk to your financial and tax advisors, or contact our office.  We are glad to provide more information or answer any questions regarding this exciting development in charitable giving.