January 20, 2011
IRA Rollover Law Reinstated and Makes Giving IRA Assets More Attractive
Congress has recently taken important steps to encourage charitable giving. Some people may now enjoy the opportunity to make tax-free charitable gifts from an IRA.
Tax incentives for giving IRA assets
New tax laws passed at the end of 2010 allow taxpayers over 70½ years-of-age to make tax-free distributions to charity directly from their traditional and Roth IRAs (Individual Retirement Accounts) in 2010 and 2011.
Donors can make tax-free charitable gifts from their IRA in any amount they choose up to $100,000 per year. A couple with separate IRAs could each give up to that amount. Amounts given to charity in this way will qualify as all or part of a mandatory withdrawal.
Benefits for donors
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Who? – Donors 70.5+ years-of-age What? – IRA assets When? – 2010 and 2011 tax years Benefit? – Reduce taxable income Limit? - $100,000/ year |
Making gifts from IRA funds that would otherwise be subject to tax if withdrawn voluntarily, or under mandatory withdrawal requirements, may be a wise choice for many. Donating IRA assets to charitable causes could help some avoid adverse tax consequences. While these gifts do not technically result in an additional tax deduction, they are nevertheless tax free. In addition, you may bypass any additional tax on your Social Security benefits that could otherwise be due because of the increased income represented by an IRA withdrawal.
Also, if you are among those concerned about estate and income taxes depleting IRA assets left to heirs, as part of your estate, you may want to make tax-free distributions to charity in 2010 and 2011 and provide for inheritances to loved ones from other assets. By giving in this way, you can assure that donated IRA funds will never be subject to income or estate taxation, thereby resulting in more assets available for your heirs.
Additional details
Keep in mind that to qualify for maximum tax benefits, gifts of IRA assets must be made directly from your IRA to the charitable interests you specify. To enjoy the full benefit of this IRA giving opportunity, gifts must be completed prior to December 31 of 2011.
For additional information on giving IRA assets, please contact the Planned Giving Office of LDS Philanthropies at 800-525-8074 or plannedgiving@ldschurch.org.
