IRA Charitable Rollovers

When President Obama signed H.R. 4853 into law on December 17, 2010, IRA charitable rollovers were extended retroactively from January 1, 2010 through December 31, 2011. IRA owners age 70½ or older once again have opportunities to make direct, tax-free transfers to charity—up to $100,000 in 2011. Click here to go to Vital Ground's Charitable Rollover How To Guide.

People 70½ and older can take advantage of this opportunity to transfer up to $100,000 tax-free from their IRA accounts to qualified charities like The Vital Ground Foundation before December 31, 2011 by doing the following:

•  Transferring the money directly from their IRA accounts to charitable organizations.

•  Understanding that transfers can be designated for a field of interest (e.g., scholarships, medical research, conservation projects, performing arts program) at qualified charitable organizations.

•  Remembering that such transfers can be used to fulfill documented pledges.

•  Recognizing that such IRA charitable rollovers will qualify—in part or in whole—for the yearly required minimum distributions for persons age 70½ and older.

•  Understanding that, while IRA owners cannot take an income tax deduction for this transfer, neither will they have to realize it as taxable income.

Persons age 70½ and older with IRAs who are likely prospects for IRA charitable rollovers in 2011 include those who:

•  Are already making gifts at or close to 50% of their adjusted gross incomes (the maximum permissible level for cash gifts each year) and, therefore, can make “over and above” gifts from their IRAs.

•  Want to make larger gifts now than possible if they used other assets.

•  Are Social Security recipients whose IRA withdrawals (when combined with other income) mean their incomes will exceed Social Security levels at which income may be subject to tax.

•  Do not have sufficient amounts of income tax deductions to itemize (frequently because they no longer have mortgage interest deductions) and, therefore, are using the standard deduction.

Donors who take advantage of the IRA charitable rollover provision can win by:

•           Reducing assets in their IRA accounts that can be highly taxed at death.

•           Making meaningful—including larger—outright gifts to their favorite charities.

•           Seeing their gifts impact their charities’ mission and results now.

Be sure to consult with your tax or financial adviser to see if an IRA charitable rollover makes sense for your situation. For more information, please contact Mark Brennan at 406-549-8650 or mbrennan@vitalground.org.

Click here to go to Vital Ground's Charitable Rollover How To Guide.