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Charitable IRA Rollover Provision


Congress' recent adoption of the American Taxpayer Relief Act (ATRA) of 2012 includes reinstatement of the Charitable IRA Rollover Provision, allowing favorable opportunities for donors and charities. ATRA 2012 will allow individuals to make tax-free direct transfers from traditional and Roth IRAs to charitable organizations such as Clarion University Foundation, Inc.

The Charitable IRA Rollover Provision, originally part of the Pension Protection Act of 2006, was extended in 2008, 2010 and again in 2012. The legislation permits donors aged 70 ½ or older to make tax-free withdrawals from certain retirement assets and transfer any amount up to $100,000 per year to a qualified charity.

Donors may make a 2013 qualifying gift any time after Jan 31 and before Dec 31, 2013 by contacting their custodian and arranging for a transfer.

Who should consider? 

:: Donors who do not itemize deductions.

:: Donors for whom withdrawal of IRA income would cause more Social Security income to be taxable.

:: Donors already giving at the 50 percent deduction limit (30 percent for long-term appreciated assets).

:: Donors who exceed income levels that would cause them to lose a portion of their itemized deductions.

:: Donors who pay state income tax but cannot claim charitable deductions on their state return.


:: Donors must be 70 ½ or older and own a traditional or Roth IRA. Funds accumulated in 401(k) or 403(b) and other types of retirement accounts do not qualify.

:: Amount cannot exceed $100,000.

:: The IRA trustees must transfer the gift amount directly to the qualified organization. If a donor makes a withdrawal and then contributes to charity, the amount would be taxable income for the donor.

:: Qualified organizations do not include advised funds, charitable trusts, private foundations or other supporting organizations.

:: IRA gifts cannot be used to fund life income arrangements such as unitrusts or gift annuities. Donors cannot receive any benefit in exchange for the gift (dinners, tickets, etc.).

The above information is intended to provide general information, not legal or professional financial advice. Because individual circumstances vary greatly, we recommend you consult your own advisor/s when considering these ideas.