In December 2010 President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. In addition to a wide range of income and estate tax changes, the act extended the IRA Charitable Rollover for the entire year of 2011. The IRA Charitable Rollover was first included in law by President Bush at the end of 2006, and has been temporarily renewed multiple times since then.
An IRA Charitable Rollover permits the owner of an IRA who is 70.5 years old or older to transfer up to $100,000 directly from the IRA to a qualified charitable organization such as the World Mission Prayer League. The transfer counts toward the minimum required distribution for the year, which may reduce the owner’s income tax liability for the year.
Here are some things you should know about the IRA Charitable Rollover:
- You must be 70.5 years old or older to qualify
- A maximum of $100,000 can be given in 2011.
- Transfers must be made directly from the IRA to the charity; only the IRA trustee or custodian can transfer the gift. A donor should not withdraw the funds and then contribute them to charity.
- Transferring funds from your IRA counts toward your required minimum distribution for the year, but does not count as income to your thereby reducing your tax liability at the end of the year. For that reason this contribution does not qualify as a charitable deduction.
- Only qualified charities are eligible; WMPL is a qualified charity. The gifts must be given directly to the organization and cannot be used to fund life income gifts such as charitable remainder trusts or gift annuities.
Financial Update
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