IRA Rollover Gifts
On December 16, 2010, Congress extended an excellent charitable planning opportunity for both 2010 and 2011. The old law allowed charitably minded individuals a golden opportunity to make gifts from their IRAs and exclude the amount of their gifts from gross income. As of now, this giving opportunity has not been extended into 2012 and beyond. To qualify under the old law:
- The donor must be 70 1/2 years of age or older;
- The transfers must go directly from the IRA to qualified charities;
- Gifts cannot exceed $100,000 per taxpayer per year;
- Gifts must be outright, not to donor advised funds, charitable remainder trusts, or for charitable gift annuities;
If IRA rollover gifts are reinstated by Congress for 2012, the University of Florida will widely distribute this information and make note of any rule changes.
This opportunity was available only for 2010 and 2011, and no charitable income-tax deduction was allowed.
Without this provision, if an individual withdrew up to $100,000 from his or her IRA and contributed it to charity, he or she would first have to include the $100,000 in his or her income. The individual would also be treated as having made a charitable contribution for the amount donated to charity. However, IRS rules limit the amount of charitable contributions of cash that can be deducted in a given year to 50% of adjusted gross income. Therefore, without the provision, it is possible that an IRA gift would not result in a "wash", and the donor might incur extra taxes as the result of the gift. The new provision ensures that problem will not occur.
A gift from your IRA would count against the minimum distribution you would be required to take from your IRA in the future
So, who benefits from this old provision?
The law presented a wonderful opportunity until the end of 2010 and 2011 for individuals to utilize their IRAs creatively to accomplish special philanthropic objectives.
- Individuals who usually give up to 50% of their adjusted gross income (AGI)—the ceiling on the allowable charitable deduction for any year—can now give up to $100,000 more from their IRA accounts, which is not subject to this limitation or taxed as a distribution. This could enable taxpayers to avoid up to $35,000 ($100,000 x 35%) in federal income tax on IRA distributions for this and next year.
- Individuals who do not itemize and who make a charitable gift in an amount less than the standard deduction ($11,400 for married couples, $5,700 for single filers) will benefit from a transfer directly from their IRA to charity.
- Individuals who are required to take minimum withdrawals but don’t need additional income can satisfy up to $100,000 of the distribution requirement with a transfer to charity.
January 2011 IRA Gifts Can be Counted as 2010 Gifts The old law contains a special rule permitting taxpayers to elect to have IRA charitable distributions made in January 2011 treated as having been made on December 31, 2010. Thus, an IRA distribution made in January 2011 was permitted to be (1) treated as made in the taxpayer’s 2010 taxable year and thus permitted to count against the 2010 $100,000 limitation on the exclusion, and (2) treated as made in the 2010 calendar year and thus permitted to be used to satisfy the taxpayer’s minimum distribution requirement for 2010.
Please call if you have questions or if we can assist you in any way.
Planned Giving Officers:
| George Cawthon |
| Doug Medlin |
Phone: (352) 392-5512
Toll-free: (866) 317-4143
Fax: (352) 392-8736
www.uff.ufl.edu
Make a Gift Online