Donors 70½ or older may be able to take advantage of an important incentive for charitable giving.  The readership of this blog tends to be younger than 70½, but I have included this information in case some of your family members to which this may apply.  The information below comes from PlannedGiving.com

Congress has re-authorized for 2012 and 2013 the provision that allows individuals to make gifts of up to $100,000 per year from their IRA accounts to one or more charities, without first incurring income tax on the withdrawal.

This means that if you are a qualifying donors you can direct that amount to Berkshire Country Day School with no federal income tax liability.  The IRA Rollover may provide you with an excellent opportunity to make a gift during your lifetime from an asset that would be subject to multiple levels of taxation if it remained in your taxable estate.

Now, there are some details and restrictions:

  • You must be 70½ or older when you make your gift, and the gift must be made from an IRA – no other retirement plans (such as 401k, 403b or SEP accounts) qualify.
  • Your gift must come to us outright – it cannot be used to establish a life-income arrangement or support a donor-advised fund.
  • Although the distribution will be free from income tax, it will not generate an income tax charitable deduction.
  • There are other details which we’ll be happy to guide you through.

Because Congress acted after the end of 2012 to pass this legislation, they have provided two ways you can make this type of gift and still have it count for 2012.

Option One is to make an IRA transfer by January 31, 2013 and elect for it to count as a charitable gift for 2012. The administrator of your IRA plan will make the actual distribution to us.  We’ve attached a sample letter of instruction that you can send to your plan provider.

Option Two applies if you took a distribution from your IRA in December 2012. In that case, you are allowed to send us a check by January 31, 2013 and elect on your tax return for the December 2012 distribution to count as an IRA rollover.

If you would like to make an IRA rollover gift for 2013, you need only direct your IRA plan provider to make a distribution to us using the attached sample letter of instruction.

If you have any questions, do not hesitate to reach out to me at 413-637-755 x115.