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Charitable IRA Opportunity

While the fate of the IRA charitable rollover remains uncertain for 2012, legislation passed in 2010* continues to enable individuals to transfer retirement plan assets tax-free to qualifying charities through December 31, 2011.  This extends the provisions enacted through the Pension Protection Act of 2006 and previously only available through December 31, 2009.

Take advantage of tax-saving gifts to charity

Americans age 70 ½ and over can transfer up to $100,000 per year from an individual retirement account (IRA) into a charitable fund without first paying federal income tax on that gift. By making the gift now, future estate and income taxes can also be avoided.

Key Points

  • A taxpayer may exclude from gross income up to $100,000 of otherwise taxable distributions from an IRA, as long as they are "qualified charitable distributions" and meet the following criteria:
    • They are made directly from the IRA trustee to one or more qualified charities.
    • They are made when the taxpayer is age 70 ½ or older.
    • They otherwise qualify for the full charitable contribution deduction (although because the amounts are not taken into income, no contribution deduction is permitted).
  • The total of each year’s qualified distributions will count toward satisfying the taxpayer’s minimum distribution requirements for their IRA.
  • Qualified charities under this law include scholarship funds, designated funds, field-of-interest funds, and unrestricted funds at community foundations. However, donor-advised funds, charitable remainder trusts, supporting organizations and private foundations are not eligible charitable beneficiaries.
  • While no charitable contribution deduction is allowed for the distribution, the donor must nevertheless receive substantiation from the charitable organization.
  • This provision expires on December 31, 2011.

The Hartford Foundation does not provide legal tax advice; we strongly recommend that you consult with a tax advisor when considering making a charitable contribution or a creating charitable giving plan.

For information about or assistance with making a gift to the Hartford Foundation, please contact the Philanthropic Services Department at 860-548-1888 or giving@hfpg.org.

* The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was signed into law by President Obama on December 17, 2010.

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