IRA Rollover Passes for 2010 and 2011

Our friends at Crescendo Interactive have offered up the following guidance regarding IRA rollovers – good stuff!

On the afternoon of December 17, 2010, the President 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. The act is retroactive to January 1, 2010, so donors who previously made 2010 IRA rollovers will qualify.

The principal rules for direct transfers from an IRA to a qualified public charity are that the IRA owner must be 70½ or older and that the transfer is for no more than $100,000 each year. A 2010 transfer qualifies for the required minimum distribution. It must be to a public charity either outright or for a specific purpose, but may not be to a donor advised fund or supporting organization. The transfer is made directly from a trustee to the charitable organization. GiftLaw Pro Chapter 4.6.8 covers the specifics of the IRA Charitable Rollover.

A very important potential 2010 benefit exists. Because Congress recognized that it is very late in the year, individuals who choose to make a qualified charitable distribution (QCD) rollover from their IRA trustee to a charity may make their 2010 charitable gift during 2010 or in January of 2011.

All charities should send an e-mail to donors to inform them about this opportunity. The e-mail could include the following information. Please include your name, address and tax ID number in the IRA Custodian e-mail.

Donor e-mail

Welcome News! The IRA Charitable Rollover passed. On the afternoon of December 17, 2010, the President 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 own an IRA and are over age 70½, you may transfer up to $100,000 directly from your IRA to _____________ because we are a qualified charity. You may not have taken your 2010 required IRA distribution and may reduce your income taxes with an IRA charitable rollover. Even if you have taken your required IRA distribution, you still may find the IRA charitable rollover a very convenient way to make a year-end gift. Thanks very much for your support.

An easy way to start an IRA Charitable Rollover is to send an e-mail to your IRA Custodian. This is usually a financial services company that manages your IRA. Please check their website for the correct e-mail address. Here is a sample e-mail. If you use this e-mail, please enter your account number in the blank.

Dear IRA Custodian,

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, effective from Jan. 1, 2010 to Dec. 31, 2011, permits a rollover directly from an IRA to a qualified public charity. As the owner of IRA account #_________________ that is in the custody of your organization, I request that you transfer from that account the sum of $_________________ to (your institution’s name and address). The Treasury Tax ID Number for this organization is 00-0000001.

It is my intention to make a Qualified Charitable Distribution (QCD) to (your institution’s name) from my IRA, which may fulfill part or all of my IRA required minimum distribution for this year.

This letter is sufficient authorization for you to make this QCD gift. However, if you require any further documents, please promptly e-mail those to me.

Cordially yours,

IRA Owner

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