IRA Charitable Rollover: 2013 Extension & 2012 Retroactivity

The American Taxpayer Relief Act of 2012 (H.R. 8), enacted on January 2, 2013, has a couple of key aspects related to charitable giving that we would like to highlight for you and your clients.

1. Charitable Deduction Maintained: The charitable deduction will continue to be coupled with an individual’s or household’s corresponding tax rate. In other words, there is no cap on charitable deductions.  However, for 2013, a reduction of itemized deductions often referred to as the “Pease Limitation” is back in force for taxpayers meeting certain higher income thresholds.

2. Extension and Retroactivity of Charitable IRA Rollover: The charitable IRA rollover for clients age 70 ½ or older has been extended again. This popular provision enables clients to make rollovers up to $100,000 from an Individual Retirement Account directly to a qualifying charity without recognizing the assets transferred to charity as income. Below are a few points related to the rollover which should be highlighted and could represent opportunities for your clients.

  1. The charitable IRA rollover allowance for people age 70 ½ or older was made retroactive to 1/1/2012 and extended through 12/31/2013. This means that a charitable IRA rollover made during this time period is acceptable. Further, this can represent up to a $200,000 charitable IRA rollover opportunity for a client, since each year’s limit is $100,000.
  2. Any IRA withdrawals (not made as charitable rollover) between 1/1/2012 and 11/30/2012 are not eligible to become charitable rollovers. However, any IRA withdrawal made from 12/1/2012 to 12/31/2012 can be submitted as a cash gift to a charity before 2/1/2013 and will be treated as a charitable IRA rollover for 2012.
  3. Regardless of whether a client made no distributions, required minimum distributions, or any other IRA distributions in 2012, an additional IRA distribution could be done before 2/1/2013 and be treated as a charitable IRA rollover for 2012 provided the other requirements and limits are met.

For more details, please consult the following link to the Council on Foundations analysis: Click Here

Also, if you have additional questions about how this affects your clients, please feel free to call or email Thomas Griffith at 315-883-5544 or tgriffith@cnycf.org.

We make every effort to ensure the accuracy of this material. The information is not a substitute for expert legal, tax, or other professional advice, and we strongly encourage clients to work with counsel to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.

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