The Charitable IRA Rollover Is Back: Act Quickly With Donors

The most recent tax law passed by Congress and signed by President Obama, included the reinstatement of the charitable IRA rollover.   To recap the context of this rule, people who are 70.5 years old and have traditional IRAs must take required distributions and pay tax on the withdrawals.  This law reinstates the ability for these folks to transfer up to $100,000 from their traditional IRAs to charitable organizations without having to pay tax on their minimum distributions.  (As an side note, since Roth IRAs have no required minimum distributions this rule does not apply to them.)

The charitable IRA rollover was last applicable in 2011.  During all of 2012, many older donors and charitable organizations were left wondering if the rule would be reinstated.  It never was.  But even though the law was signed in 2013, there is a work-around for donors who delayed taking their minimum distribution until December 2012.  For those donors, they can donate cash to their charities of choice by January 31, 2013 and count it toward all or part of the minimum distribution for 2012.

So, if you haven’t already, you will want to reach out to your donors aged 70.5 and alert them both to the reinstatement of the charitable IRA rollover and to the special January 31, 2013 deadline for those who took distributions in December.  Typically, January is a slow gift giving month.  That may not be the case for your institution in 2013.


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