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The IRA Charitable Rollover: EXTENDED IN 2013

With the agreement on a “fiscal cliff” deal, in the bill that ultimately passed on January 1, 2013, (the American Taxpayer Relief Act of 2012) the charitable deduction will continue to be coupled with an individual's or household's corresponding tax rate. Additionally, the IRA Charitable Rollover provision has been extended. Tax-free distributions to charity from an Individual Retirement Arrangement (IRA) held by someone age 70½ or older of up to $100,000 per taxpayer will be extended until December 31, 2013.

An IRA charitable rollover is described as a “qualified charitable distribution,” or money that individuals may direct from their traditional IRA to eligible charitable organizations such as The Community Foundation of Middle Tennessee. Individuals may exclude the amount distributed directly to charity from their gross income.

In addition, a retroactive extension to January 1, 2012, also allows donors to make distributions directly to eligible charities before February 1, 2013 and elect to have such distributions treated as qualified charitable distributions in 2012. Individuals who have already received an IRA distribution in December 2012 can count that distribution as a 2012 IRA charitable rollover if they transfer the amount in cash before February 1, 2013 to an eligible charity. Donor-Advised Funds and private foundations do not qualify for the IRA charitable rollover.

Through The Community Foundation, donors of an IRA have several options to support charitable causes and community needs, including those that cannot be anticipated at the time your gift is made. For some, this is a once-in-a-lifetime opportunity to create an endowment to benefit the community in perpetuity through vehicles such as:

·   A Designated Fund to benefit a favorite charity — a senior center, museum or any qualifying nonprofit organization of a donor’s choice;

·   A Scholarship Fund to support students pursuing education aspirations; or

·   A Field-of-Interest Fund to ensure that resources are forever available for causes close to a donor's heart, ranging from arts to zoology.

Please contact us to learn more, at 615-321-4939. For our staff list, click here. Remember that if you act before Feb. 1, 2013, you can have such distributions treated as qualified charitable distributions in 2012.

A fact sheet on the IRA Charitable Rollover is available through the Council On Foundations.

To learn more about the deal reached to avert the fiscal cliff - the American Taxpayer Relief Act of 2012 - and its impact on charitable giving, click here for The Council On Foundation's recent analysis.


Background on the IRA Rollover provision:

This provision was initially established through the Pension Protection Act of 2006 and was extended in December of 2010, allowing donors age 70.5 and older to direct a portion of their IRA, up to $100,0000, to charity, without recognizing the assets transferred to the qualifying charity as income. Through December 2011 when the provision expired, The Community Foundation helped many donors turn a portion of their IRA into a tax-saving gift.

Now, as of January 1, 2013, this provision is active again.