IRA Charitable Rollover Returns!

January 4, 2013

The IRA Charitable Rollover provision was reinstated for 2012 and 2013 in the tax deal signed into law this week. The IRA Rollover provision has proven to generate new and increased charitable donations for orchestras in the years it has been available. In the course of its history, the IRA Rollover has expired and been renewed several times, leaving many donors confused about the status. Here are the facts:

The IRA Rollover expired at the end of 2011, but is now retroactively reinstated for 2012. If any donors aged 70 ½ and older had instructed their IRA administrators to make a distribution of up to $100,000 directly to a charity during 2012, that distribution will not be treated as taxable income for 2012. However, Congress recognized that few donors would have done this, since the provision had not yet been reinstated. So, the law now includes two additional opportunities for individuals to take advantage of the IRA Rollover incentive for the 2012 tax year:

  • IRA Rollover gifts made through January 31, 2013 may count as 2012 contributions.
  • Qualifying personal IRA distributions taken by individuals in the month of December 2012 can be counted as a "charitable rollover" if contributed to a charity as cash by January 31, 2013. Since many IRA owners take their mandatory distribution at the end of the year, this is an opportunity to transfer that distribution to a charity without treating it as taxable income.

The IRA Charitable Rollover Provision is reinstated for 2013. This means that donors aged 70 ½ and older can instruct their IRA administrators to make tax-free distributions of up to $100,000 directly from their IRAs to charitable organizations through December 31, 2013.

It is always wise to advise donors to contact their IRA administrator and/or tax advisors for more detail as you inform them that this important charitable giving incentive is once again available.

Next Steps: The League, in partnership with you, will continue to advocate to Congress for the IRA Rollover to be made permanent. In the meantime, please feel welcome to contact Heather Noonan (This email address is being protected from spambots. You need JavaScript enabled to view it. ) or Najean Lee (This email address is being protected from spambots. You need JavaScript enabled to view it. ) with questions, or examples of how the IRA Rollover has benefitted the work of your orchestra.