For the past several years, and for the remainder of 2011, people over the age of 70 and a half have been able to make charitable contributions of up to $100,000 per year directly from their Individual Retirement Accounts.
Under these rules, such gifts do not trigger any federal income tax for the IRA owner, but they do count against the amount required to be distributed from the IRA for the year.
This great tax break will end as of December 31, 2011, unless Congress takes action to extend it, and who thinks Congress will be able to accomplish that?
So given that it’s likely to go away soon, you should consider taking advantage of this tax break if you are:
- Over 70 and a half years of age, and
- Have not yet taken your required minimum distribution from your IRA for 2011, and
- Do not want or need to receive money from your IRA as income taxable to you this year.
There are a couple of things to remember if you want to take advantage of this (soon to disappear?) opportunity.
The recipient charity must be qualified as publicly supported (no private foundations or donor-advised funds), and the distribution needs to go directly from your IRA to the charity without going to you first.
You will need to contact your IRA administrator to arrange for the distribution, and it must be made prior to the end of the year.
So don’t delay until December, when your request may be lost in the year-end shuffle, or when your IRA administrator might not have enough time to process the request before time runs out.
Your selected charity will surely appreciate your gift in these difficult times, and you will have the added satisfaction of reducing your federal tax bill for 2011.