IRA Gifts Possible for WKU
On New Year’s Day, Congress approved qualified charitable distributions for 2012 by IRA owners over age 70½, up to $100,000, with the deadline for 2012 gifts extended through January 31, 2013. The provision is part of the American Taxpayer Relief Act of 2012, which President Obama has signed 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 (perhaps after abandoning hope Congress would renew the IRA gift law for 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. Please contact us if you wish to consider additional cash gifts that would qualify as 2012 IRA charitable distributions.
- If you made a direct IRA gift during 2012, hoping Congress would renew the law for 2012, your optimism has been rewarded: The IRA gift provision is retroactive to January 1, 2012, and you will qualify for all tax benefits (see the discussion below).
- 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, but they apparently will not 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 are tax free in 2012 and 2013 up to $100,000 and, better yet, 2013 gifts will satisfy part or all of the required minimum distributions IRA owners must take after age 70½. That means income tax savings, even for donors who do not itemize their deductions. As noted above, these tax savings may also be available to IRA owners who took 2012 required minimum distributions in December, then followed up with cash contributions through January 31, 2013.
- 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 If IRA owners withdraw funds and then contribute them to charity separately, amounts withdrawn will be taxable to the donor.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 70½), 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 our office at (270) 745-4494 if you would like more information about making an IRA gift for 2012 or 2013.
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