Menu Close

Giving Money to a Charity with a Self-Directed IRA May Become Less Popular Soon

Here’s how the law worked: Generally, taxpayers who were 70½ or older could transfer as much as $100,000 a year directly from an individual retirement account or self directed IRA to a qualified charity without having to include any of that transfer as taxable income. The transfer could be counted toward the taxpayer’s required minimum distribution for the year.

This law was very popular, especially among charities. They reported receiving many significant donations that they might not have received if that law hadn’t existed.

FEDERAL TAX PROVISIONS SCHEDULED TO EXPIRE IN 2011 OR 2012

Tax-free distributions from individual retirement plans for charitable purposes (sec. 408(d)(8))

  • In general, the provision allows an exclusion from gross income for otherwise taxable distributions from a traditional or Roth individual retirement arrangement (“IRA”) in the case of qualified charitable distributions. The exclusion may not exceed $100,000 per taxpayer per taxable year. A qualified charitable distribution generally is any distribution from an IRA made directly by the IRA trustee to an organization described in section 170(b)(1)(A) (generally, public charities), other than a supporting organization or a donor advised fund. Distributions are eligible for the exclusion only if made on or after the date the IRA owner attains age 70-1/2 and only to the extent the distribution would be includible in gross income (without regard to the provision).

Other statutory requirements apply.

  • The provision was enacted in the Pension Protection Act of 2006, Pub. L. No. 109-280, for distributions made in taxable years beginning before January 1, 2008.
  • The provision was most recently extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. No. 111-312, for distributions made in taxable years beginning before January 1, 2012. The 2010 Act included a special rule permitting taxpayers to elect to have qualified charitable distributions made in January 2011 treated as having been made on December 31, 2010, for certain purposes

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP and Dewey & LeBoeuf LLP.

To learn more about the IRA Financial Group please visit our website at www.irafinancialgroup.com or call 800-472-0646.

Share the knowledge
Posted in IRA Financial Group

Leave a Reply