The U.S. government recently approved a bill which permanently extends the provision that permits tax-free distributions to charities from an Individual Retirement Arrangement (IRA). If you are age 70 ½ or older, you can gift up to $100,000 from your IRA with no tax consequences. Contact your IRA plan administrator to find out how to take advantage of the just passed Protecting Americans from Tax Hikes Act law.
This newly signed law allows you to directly transfer up to $100,000 to any 501(c)(3) public charity in a calendar year; however, it does not allow transfers to private foundations, donor advised funds, or any donor benefit, such as gala tickets. If done properly, the gift is not a taxable withdrawal from your IRA.
Checks must go directly from your IRA plan administrator to the charities.
If you have not taken your required minimum distribution, these transfers count toward this amount. Don’t miss this opportunity for tax savings, both now and next year.
Since IRA funds are not taxable, using your IRA for charitable donations is equal to a full income tax deduction – which is especially valuable if you do not itemize! Note: Because IRA funds grow tax-free, you should not take a deduction when filing your income taxes if you gift using your IRA.