An expired tax planning tool for IRA owners is back. In 2011, taxpayers age 701/2 or older may make charitable transfers of otherwise taxable distributions from their traditional IRAs and Roth IRAs up to a total of $100,000 per taxpayer, per taxable year. So, rather than adding your required distributions to your taxable income, you can choose to donate those distributions to charity up to $100,000 per year.
Taxpayers were not able to make these tax-free transfers to charity in the 2010 tax year because the relevant Tax Code provision expired at the end of 2009. However, a recent law change permits IRA owners to make charitable transfers during January of 2011 as if they were made during 2010.
These charitable transfers must be made directly from the IRA trustee to the charitable organization and are not otherwise deductible.
Please contact us if you would like to discuss planning opportunities for your IRA distributions.
