TAKE ADVANTAGE OF THE IRA-TO-CHARITY TRANSFER

Article Highlights

• Direct IRA-to-charity transfers are allowed in 2013 for taxpayers age 70½ and over.
• Maximum transfer allowed is $100,000.
• Transfer counts towards the required minimum distribution.
• Beneficial for taxpayers with Social Security income and those who do not itemize their deductions.

For 2013, if you are age 70½ and over, you are allowed to make direct distributions (up to $100,000) from your Traditional or Roth IRA account to a charity. The distribution is tax free, but there is no charitable deduction, and the distribution can count toward your required minimum distribution (RMD). This provision can be very beneficial for a taxpayer who is inclined to make substantial charitable contributions for the year and:

• Receives Social Security (SS) benefits, and the taxpayer’s required minimum distribution for the year causes an increase in the tax on the SS benefits; or
• Is unable or is marginally able to itemize deductions for the year.

Arranging a direct transfer may require some extra time, so if you want to donate some of your IRA to a charity, don’t wait until the last minute to make arrangements with your IRA trustee to do so.

The higher a taxpayer’s income tax bracket, the greater the tax benefits when making a direct IRA-to-charity distribution. Please contact this office if you have questions related to the tax benefits derived from this strategy.