IRA Charitable Rollover

Now it’s easier than ever to make the gift of a lifetime 

IRAs can qualify for tax-free charitable distributions.

 
The Chautauqua Region Community Foundation can help turn your individual retirement accounts (IRAs) into tax-saving charitable gifts. 
 
You can give more for less.
Thanks to recently passed legislation, American seniors can make the gift of a lifetime by giving their IRAs to charity without federal tax penalty. So your retirement funds can go further than ever before.
 
For years, estate planners have recommended that retirement assets may be the most tax-effective asset in larger estates to distribute to charity. These assets are not only vulnerable to heavy taxation as part of an estate but also can be taxed again as income in respect to a decedent on the tax returns of heirs.
 
Until now, there was a disincentive for retirees to give IRAs to charity during their lifetimes because withdrawals from IRAs were subject to income tax—even those given to charity.
 
Tax law.
On December 17, 2010, President Obama signed into law The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This bill restores the IRA Charitable Rollover for 2010 and permits its use in all of 2011.

If you are over 70½, you are eligible to make an IRA charitable rollover to the Chautauqua Region Community Foundation.  And the good news is that your IRA distribution to charity will be similar to other IRA rollovers - it will not be included in your Federal taxable income. 
 
While there is no added deduction for an IRA charitable rollover, avoiding up to  $100,000 of taxable income may save substantial income taxes not otherwise available.
 
Who may want an IRA rollover?  Charitable IRA rollovers will be popular for at least five reasons:
 
1.  Convenience - It is a very simple and easy way to make a gift.
 
2.  Standard Deduction Benefit - With an IRA charitable rollover, you may take the standard deduction.  Since the IRA rollover is not on your return, it may reduce your taxes.
 
3.  Lower Tax on Social Security - Because of an IRA distribution, you may be paying tax on 85% of your Social Security.  Using the IRA charitable rollover may lower your income and only 50% of Social Security is taxable.
 
4.  No Giving Limits - With an IRA charitable rollover, you may give more than the usual deductible amount of 50% of income.
 
Your IRA charitable rollovers during 2011 could be $1,000, $5,000 or any amount up to $100,000. 

There is so much more we’d like you to know. To learn more, contact Randy Sweeney, rsweeney@crcfonline.org or call (716) 661-3390.

 

 

The information provided here is based on continuing analysis of the Pension Protection Act of 2006. Every effort has been made to ensure accuracy of the answers to these questions. However, due to the complexity of the bill and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information may be subject to change. It is not a substitute for expert legal, tax or other professional counsel and we strongly encourage donors to work with their professional advisors to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Co.

The information provided here is based on continuing analysis of the Pension Protection Act of 2006. Every effort has been made to ensure accuracy of the answers to these questions. However, due to the complexity of the bill and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information may be subject to change. It is not a substitute for expert legal, tax or other professional counsel and we strongly encourage donors to work with their professional advisors to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Co.