Charitable IRA Rollover
Charities and foundations are created and sustained by people who want to give their resources to solve problems and enrich their communities. Recognizing this, in 2006 lawmakers enacted a provision intended to encourage increased charitable giving by rewarding Americans who make donations to charitable organizations. The Charitable IRA Rollover permits taxpayers age 70 ½ and older to make tax-free charitable gifts totaling up to $100,000 per year from traditional Individual Retirement Accounts (IRA) and Roth IRA’s. This provision has been extended by Congress.
How does the Charitable IRA Rollover work? Taxpayers age 70 ½ and older are required to make annual distributions from their retirement accounts. The distributions are included in the taxpayers’ adjusted gross income (AGI), and taxpayers pay taxes on them. The Charitable IRA Rollover permits taxpayers to make donations directly to charitable organizations from their IRA’s without counting them as part of their AGI and, consequently, without paying taxes on them. For more information on this mutually beneficial charitable giving option, please consult your accountant or financial advisor.