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The IRA Charitable Rollover Is Back for 2012 and 2013

The charitable IRA rollover legislation allows you to transfer lifetime gifts up to $100,000 using funds from your individual retirement account (IRA) without undesirable tax effects.

You may contribute funds this way if:
  • You are age 70½ or older at the time of the gift.
  • You made a qualified charitable distribution of any amount up to $100,000 in 2012 or make a qualified charitable distribution before Feb. 1, 2013, which may count retroactively for 2012.
  • You make a qualified charitable distribution of any amount up to $100,000 on or before Dec. 31, 2013, to qualify for 2013.
  • You transfer funds directly from an IRA.1
  • You transfer the gifts outright to one or more qualified charities, but not to supporting organizations, or for gift annuities, charitable trusts, donor advised funds or any gift from which you receive a personal benefit.
Q. I've already named your organization as the beneficiary of my IRA. What are the benefits if I make a gift now instead of after my lifetime?
A. By making a gift this year of up to $100,000 from your IRA, you can see your philanthropic dollars at work. You are jump-starting the legacy you would like to leave and giving yourself the joy of watching your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have already made by transferring that amount from your IRA under this legislation as long as it is $100,000 or less for the year.

Q. I'm turning age 70½ in a few months. Can I make this gift now?
A. No. The legislation requires you to reach age 70½ by the date you make the gift.

Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes. Under the legislation, gifts can be made from IRAs. Pension, profit sharing, 401(k), 403(b) and other forms of retirement funds do not fall under this tax legislation.

Q. Can my gift be used as my minimum required distribution under the law?
A. Yes, absolutely. If you have not yet taken your required minimum distribution, the charitable IRA rollover gift can satisfy all or part of that requirement. Contact your IRA custodian to complete the gift.

Q. Do I need to give my entire IRA to be eligible for the tax benefits?
A. No. You can give any amount under this provision, as long as it is $100,000 or less this year. If your IRA is valued at more than $100,000, you can transfer a portion of it to fund a charitable gift.

Q. I have two charities I want to support. Can I give $100,000 from my IRA to each?
A. No. Under the law, you can give a maximum of $100,000. For example, you can give each organization $50,000 this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.

Q. My spouse and I would like to give more than $100,000. How can we do that?
A. If you have a spouse (as defined by the IRS) who is 70½ or older and has an IRA, he or she can also give up to $100,000 from his or her IRA.

Q. I am 73 years old and made a gift of less than $100,000 directly from my IRA to a qualified organization in 2012. Am I eligible to receive the tax benefits?
A. Yes. Even though the IRA charitable rollover legislation expired on Dec. 31, 2011, the American Taxpayer Relief Act of 2012 permits qualified distributions from an IRA made anytime in 2012 through Jan. 31, 2013, to count in the 2012 calendar year for tax purposes. Contact your professional tax advisor to make sure your contribution counts for 2012.

Q. I took a distribution from my IRA on Dec. 15, 2012, and would like to make a contribution to a qualified charitable organization. Am I eligible to receive the tax benefits?
A. Yes. A taxpayer who took a distribution from the IRA in December 2012 may make a contribution before Feb. 1, 2013, and treat this as a direct transfer. Contact your professional tax advisor to make sure your contribution counts for 2012.

For more information, visit www.tlu.edu/giftplanning or contact Renee Rehfeld at 830-372-8030 or rrehfeld@tlu.edu with any questions you may have.