IRA Charitable Rollovers Are Back!

IRA charitable rollovers are back! When President Obama signed H.R. 4853 into law on December 17, 2010, IRA charitable rollovers were extended retroactively from January 1, 2010 through December 31, 2011. IRA owners age 70½ or older once again have opportunities to make direct, tax-free transfers to charity—up to $100,000 in both 2010 and 2011.

Scoring: People 70½ and older can take advantage of this opportunity to transfer up to $100,000 tax-free from their IRA accounts to qualified charities before January 31, 2011 and still have these dollars count in their 2010 income tax returns. And, they can give up to $100,000 again before December 31, 2011 by doing the following:

  • Transferring the money directly from their IRA accounts to charitable organizations.
  • Understanding that transfers can be designated for a field of interest (e.g., scholarships, medical research, conservation project, performing arts program) at qualified charitable organizations.
  • Remembering that such transfers can be used to fulfill documented pledges.
  • Recognizing that such IRA charitable rollovers will qualify—in part or in whole—for the yearly required minimum distributions for persons age 70½ and older.
  • Understanding that, while IRA owners cannot take an income tax deduction for this transfer, neither will they have to realize it as taxable income.

Line Ups: Persons age 70½ and older with IRAs who are likely prospects for IRA charitable rollovers in 2010 and/or in 2011 include those who:

  • Have not taken their required withdrawals yet 2010 and, therefore, can use the IRA charitable rollover to fulfill some or all of their 2010 required minimum distribution.
  • Are already making gifts at or close to 50% of their adjusted gross incomes (the maximum permissible level for cash gifts each year) and, therefore, can make “over and above” gifts from their IRAs.
  • Want to make larger gifts now than possible if they used other assets.
  • Are Social Security recipients whose IRA withdrawals (when combined with other income) mean their incomes will exceed Social Security levels at which income may be subject to tax.
  • Do not have sufficient amounts of income tax deductions to itemize (frequently because they no longer have mortgage interest deductions) and, therefore, are using the standard deduction.

Game Plans: Winning strategies and game plans include:

  • Identifying your prospects who might be eligible to take advantage of the IRA charitable rollover provision in 2010 (including until January 31, 2011) and in 2011.
  • Making persons who are not old enough to take advantage of this provision aware of it so they can influence parents, aunts, uncles, and friends who are old enough to do an IRA charitable rollover.
  • Using the IRA charitable rollover opportunity to talk with your prospects about planned and outright gifts, regardless of whether they take advantage of the IRA charitable rollover—i.e., as part of your overall major gifts program.
  • Helping eligible donors know how to contact their IRA custodian to obtain the required forms or to communicate their intentions through a letter.
  • Communicating this information—immediately and through January 31,2010 and during all of 2011—through articles in your magazine, electronic newsletters, links on the homepage of your websites, and personal visits.

Winning: Donors who take advantage of the IRA charitable rollover provision can win by:

  • Reducing assets in their IRA accounts that can be highly taxed at death.
  • Making meaningful—including larger—outright gifts to their favorite charities.
  • Seeing their gifts impact their charities’ mission and results now.

Charities that move ahead now to communicate this opportunity can win by:

  • Increasing dollars available for current operations when donors use some or all of their required minimum IRA distributions to increase their annual gifts.
  • Building endowments when donors transfer up to $100,000 of their eligible IRA assets to charitable organizations and designate them for permanently endowed funds.
  • Helping fund important building and facility projects.

For more information, please contact

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