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IRA works wonders for charity, thanks to rollover rule

January 25, 2011

If you are over 70 ½ years old – or know someone who is – the extension of Charitable IRA legislation approved in December 2010 provides good news about your options for giving to your favorite charity. Some of you have already seized the opportunity to make a distribution before Jan. 31, 2011, which will count for 2010. Others are planning to do so before Dec. 31, which will count as a 2011 distribution.

The great thing about using IRA assets for charity is that you can count the distribution as part of what you are required to take out, but you don’t have to count it as income or be taxed for receiving it, as you would if you took the distribution and then gave to charity. The direct distribution avoids all that, under a provision first instituted in 2006.

For many people, every bit of IRA income is important to pay their bills. But for those who are required to take out more than they really need, it’s a benefit to be able to direct a portion to charity and bypass the taxes.

“It is a win-win for people who would rather give to charity than pay taxes and the nonprofit organizations they choose to support,” said Erin Stephenson, Vice President Development for the Community Foundation, who has worked with a number of donors who used IRA assets in a variety of ways for charity.

Click here to find out more about how the provision works and how you can help our community through your IRA.


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