The Individual Retirement Account Charitable Rollover, first enacted by Congress in 2006, expired in 2009. However, in the new tax bill signed by President Barack Obama, the IRA Charitable Rollover provision has been extended through 2011. This provision allows individuals 70 1/2 or older to make tax-free gifts of up to $100,000 to qualified charitable organizations, like Clara Barton Hospital Foundation, using funds transferred directly from their traditional IRAs or Roth IRAs.
Beginning at age 70 1/2, all IRA owners are required to take annual minimum distributions, even if they do not need the income. With the charitable rollover, IRA owners may use the required distribution and other money in their IRAs to support charitable causes, without being taxed on the distribution. No additional tax deduction is taken for an IRA Rollover gift to charity. IRA owners are seeing great benefit by donating through their Individual Retirement Accounts. Donors who contact their IRA custodian and have the check made payable directly to the Foundation or any other public charity do not have to count the distribution as taxable income. Tax incentives such as the IRA Charitable Rollover provision play a vital role in encouraging donors to make gifts. The rollover provision is a powerful and unique way that donors can support charitable organization like the CBH Foundation. Recently the Foundation received an outright gift from an IRA rollover which made an immediate impact on the Foundation, and the endowment which funds nursing scholarships. This provision is a win-win for both the foundation and the donor.
The donor can give without realizing taxes on the distribution. Donors who may be interested in tax-free IRA distributions are encouraged to get in contact with their IRA custodians. Certain limitations do apply to these non-taxable charitable distributions from an IRA. They include: distributions cannot exceed $100,000 per person per year, donations must be made to a public charity (not a private foundation); gifts must be outright and cannot be made to a supporting organization or a donor advised fund; and no goods or services can be received in exchange for the contribution. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are not eligible for the tax-free treatment.
The Charitable IRA Rollover offers another way to donate to Clara Barton Hospital Foundation between now and the end of the calendar year. For tax year 2011, minimum required distributions must be donated by December 31, 2011. The extension, part of the Tax Relief Act of 2010, signed on December 23, 2010, is retroactive for tax year 2010. If you haven’t already taken your MRD for 2010, it must be donated directly to the charity by January 31, 2011, in order to count toward a 2010 MRD. For more information about making a charitable gift from an IRA, contact your tax or estate planning attorney.