On Jan. 2, 2013, the Charitable IRA Rollover provision was signed into law once again providing philanthropic Americans a way to use the money in their IRAs to make charitable gifts. If you have an IRA and plan on making a gift to WVIK in 2013, this legislation could positively affect you.
Those of you who have gifted from your IRAs in this way in the past are familiar with how this positively impacts your financial situation. There are two unique provisions to this renewal:
1) Qualified distributions made by Feb. 1, 2013, may be counted retroactively for the 2012 tax year.
2) A taxpayer who took a distribution from an IRA in December 2012 may make a contribution to a qualified charity before Feb. 1, 2013, and treat this as a direct transfer.
This means that you still have time to make a 2012 charitable gift to WVIK in January 2013 if you:
A. Received an IRA distribution in December 2012, or
B. Initiate a charitable transfer in January 2013 and the charity receives the distribution directly.
Frequently Asked Questions
Q: Who may take advantage of this legislation?
A: Individuals who have an IRA and have attained the age of 70½ on or before the date of their gift qualify.
Q: What retirement plans are covered by the law?
A: Only Traditional and Roth IRAs qualify.
Q: How much may I give?
A: The maximum contribution is $100,000 per year, per person.
Q: What gifts qualify?
A: Outright gifts where the donor receives nothing in exchange for the gift qualify.
Q: Can my charitable gift satisfy my Minimum Required Distribution from my IRA?
A: Yes.
Q: May I take my distribution and then contribute?
A: If you received a distribution from your IRA in December 2012 you may make a contribution to a qualified charity before Feb. 1, 2013, and treat it as a direct transfer. Otherwise, your gift must be a direct transfer from your IRA to the charity.
Q: I gave from my IRA earlier in 2012. Will that gift be under this provision?
A: Yes, the Act is retroactive to cover gifts made earlier in 2012.
Q: I wanted to give in 2012 but didn’t. May I still give and have it count as a 2012 gift?
A: Yes, you may still give a gift in January 2013 and have it count as a 2012 gift.
Q: Will the distribution from my IRA be completely "free?"
A: That depends. The Act’s provisions deal with eliminating the federal tax previously associated with these gifts. State and local taxes (where applicable) could still result in a "cost" associated with your gift. Please contact your advisor to discuss your particular situation.