Last Minute Tax Tips for Seniors: IRA Charitable Rollover

December 20, 2010 by Jan Roberg
Filed under: Charitable Donations, IRA, Last Minute Tax Tips 

IRA Charitable Rollover

UPDATED FOR 2013

 

The Charitable IRA Rollover is still available for 2013!

What is an IRA Charitable Rollover?  If you’re 70 and 1/2 or   older, you’re required to make required minimum distributions (RMD) from your Individual Retirement Account (IRA.)  Even if you don’t need the money, you have to take it out and you pay tax on it.  If you don’t, the penalties are even worse than any tax you’d have to pay.   Additionally, many seniors don’t get the benefit of claiming their charitable donations on their income tax returns because they don’t have enough other things to deduct like mortgage interest.

The IRA charitable rollover helps with this problem by allowing you to take money out of your IRA and make a direct contribution to a charity.  The distribution counts towards you RMD and it’s tax free to you because it went to the charity.

Can you make a contribution of more than your RMD?  Yes you can.  You can actually make a charitable distribution of up to $100,000 from your IRA with no federal income tax impact.  $100,000 – that wasn’t a typo.  If you’re in a financial position to make a donation like this, that would be $100,000 to a charity of your choice with no limitations as to its deductibility because it’s part of an IRA charitable rollover.

 

Comments

4 Comments on Last Minute Tax Tips for Seniors: IRA Charitable Rollover

  1. Jan Roberg on Wed, 22nd Dec 2010 10:10 pm
  2. I’ve been reading some of the financial blogs and CPA newsletters. The general consensus seems to be that if you are going to make a charitable donation from your IRA for 2010, and you want it to count for 2010, you should do it now and not wait until January. The law says that you have to do it before February 1, but if you want your paperwork filed correctly, get it done by December 31.

  3. cosmetic surgery on Tue, 4th Jan 2011 9:39 am
  4. Thank you, I have recently been searching for information about this topic for ages and yours is the best I have discovered so far.

  5. dotti moore on Mon, 19th Sep 2011 10:38 am
  6. Thanks for your answer on Yahoo ask, did not know about this tax advantage for
    reducing my RMD by donating to charity and my advisor did not know about it either..thanks, dm

  7. Jan Roberg on Mon, 19th Sep 2011 2:26 pm
  8. Thanks Dotti,
    I’m not surprised your advisor didn’t know about it. Congress sort of passed it through at the last minute in 2010 after most people already had dealt with their RMD. Since it reduces tax income, they don’t seem to be promoting it much. Glad I could help.

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