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August 20, 2014 | 24th Av 5774
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IRA Charitable Rollover

Tax Law revisions provide incentive for charitable giving to your synagogue through the "IRA Charitable Rollover."

IRA RolloverOne important outcome of last week's "Tax Relief, Unemployment Insurance Reauthorization , and Job Creation Act of 2010" is the reinstatement of the IRA Charitable Rollover. Individuals over age 70 ½ may make distributions of up to $100,000 from a traditional or Roth IRA directly to a charitable organization such as your synagogue.

Contributions for the 2010 tax year can be made retroactively through January 31, 2011. Given the short window of opportunity to take advantage of this incentive for 2010, we encourage you to alert your congregants as quickly as possible.

About the Charitable Rollover:

The IRA Charitable Rollover was first enacted on August 17, 2006, as part of the Pension Protection Act of 2006 and has been reinstated for 2011.

  • Taxpayers age 70½ and older are required to make annual distributions from their IRAs which are then included in the taxpayers' adjusted gross income (AGI) and subject to taxes. The IRA Charitable Rollover permits those taxpayers to make donations directly to charitable organizations from their IRAs without counting them as part of their AGI and, consequently, without paying taxes on them.
  • A donor's total combined charitable IRA rollover contributions cannot exceed $100,000 in any one year.
  • Eligible Charities. Charitable contributions from an IRA must go directly to a public charity (including synagogues) that is not a supporting organization. Contributions to donor-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA rollover contributions.
  • Eligible Retirement Accounts. Distributions can only be made from traditional Individual Retirement Accounts or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are ineligible for the tax-free treatment.
  • Directly to the Charity. Distributions must be made directly from the IRA trustee payable to the public charity.
  • No Gifts in Return. Donors cannot receive any goods or services in return for charitable IRA rollover contributions in order to qualify for tax-free treatment.
  • Written Receipt. In order to benefit from the tax-free treatment, donors must obtain written substantiation of each IRA rollover contribution from each recipient charity.

Congregants considering this opportunity should of course consult their own financial and legal advisors.

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