Dear Directors and Trustees,
You may have heard that, on New Year's Day, Congress approved an extension of the qualified IRA charitable distribution law. The extension of this law allows IRA holders over the age 70-1/2 to make qualified IRA charitable distributions up to $100,000, and extends the deadline for 2012 gifts through January 31, 2013. The provision is part of the American Taxpayer Relief Act of 2012, which President Obama has promised to sign into law.
What does this mean to our supporters who qualify to make IRA gifts?
If you took a required minimum distribution in December, 2012, a special provision allows part or all of that distribution to be treated as a qualified charitable distribution for 2012, to the extent of any cash gifts made to qualified organizations after your December distribution - including gifts made through January 31, 2013.
- Any qualified charitable distributions made after December 31, 2012, but before February 1, 2013, will be considered made on December 31, 2012. These January gifts (up to $100,000), will not create any taxable income for donors for 2012 or 2013, nor will they reduce donors' income taxes for 2012.
- The IRA gift law has been extended for the entirety of 2013, so qualified donors can make direct IRA gifts of up to $100,000 for both 2012 (by January 31) and 2013 (anytime in 2013).
Here are some important points to keep in mind about IRA gifts:
- Charitable distributions of up to $100,000 are tax free in 2012 and 2013 and, better yet, 2013 gifts will satisfy part or all of the required minimum distributions IRA owners must take after age 70�. That means income tax savings, even for donors who do not itemize their deductions.
- Only the IRA custodian can transfer gift amounts to a qualified organization. If IRA owners withdraw funds and then contribute them to charity separately, amounts withdrawn will be taxable to the donor.
- IRA donors need receipts of the same kind provided for other types of charitable contributions. It's important that donors coordinate IRA contributions with our office to ensure that appropriate documentation is provided.
- Owners of "inherited" IRAs can make gifts (if they are over 70�), but other retirement plans, such as pensions, 401(k) plans and others are not eligible.
- IRA gifts cannot be made to charitable remainder trusts or for charitable gift annuities.
Please call us right away if you would like more information about making a qualified IRA charitable distribution for 2012 or 2013. As always, please contact your accountant, financial advisor or attorney for specific tax, legal and financial advice.
Gratefully and for Hope's children,
Clint W. Paul, CPA
P.S. If you know anyone that might benefit from this opportunity, please forward this email at the link below.