The IRA Charitable Rollover

The IRA Charitable Rollover was first enacted in 2006 and expired on December 31, 2009. This allowed individuals aged 70 ½ and older to donate up to $100,000 from their IRA’s to public charities without having to count the distributions as taxable income. On December 16, 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853), which retroactively extends the IRA charitable rollover provision from January 1, 2010 through December 31, 2011.

The rules are fairly simple: You must be 70 ½ or older. The rollover for 2010 must be completed before January 31, 2011. The rollover for 2011 must be completed between January 1, 2011 and December 31, 2011. Rollovers can only be made from traditional IRA’s. Rollovers cannot exceed $100,000. Amounts more than that will be added to taxable income. Who could benefit from this strategy? If you do not itemize deductions, this rollover benefits you as you do not receive a tax benefit for your charitable contributions. If your charitable contributions already exceed 50%-30% limits of your AGI for 2010, this allows you to give more. If your Social Security income is taxable, by avoiding the recognition of taxable income here, you may have less of your SS income subject to tax.

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