IRA Rollover Provision

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 includes an extension of the ‘IRA charitable rollover provision’ originally enacted by the Pension Protection Act in 2006.  This extension provides the opportunity for many supporters to easily make a gift from IRA assets.

• Gifts must be made no later than December 31, 2011.
• Donors must be 70 ½ years of age or older when the gift is made.
• The provision excludes up to $100,000 from gross income per taxpayer, per year for cash gifts to qualified charities made from traditional IRAs and Roth IRAs  (not from 401 (k), 403 (B), annuities or SEPs).
• There is no charitable tax deduction when this gift is made, but donors will not have to pay income tax on the IRA withdrawal.
• The IRA transfers must be made directly to charity outright—not to deferred gift vehicles, donor advised funds or supporting organizations. 
  

WHO CAN BENEFIT?

• People who already give 50% of their adjusted gross income (the ceiling on the allowable charitable deduction for any one year)—can now transfer up to $100,000 from their IRA and that amount will not be subject to the limitation.
• People who are subject to the 2% rule (which requires that itemized deductions be reduced by 2% of AGI in excess of $150,000). PPA IRA gifts are not included.
• People who do not itemize. Since there is no charitable deduction anyway, there will be a tax incentive to give (no income tax on the IRA withdrawal.)
• People with significant assets in IRAs.
• People wishing to satisfy their satisfy their required minimum distribution requirements for 2010 and 2011.
  

FAQs about the IRA rollover provision

Sample letter to send to your IRA administrator