IRA CHARITABLE ROLLOVER EXTENDED
Important Alert for our Special Donors over Age 70 ½
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law on December 17, 2010. (“2010 Tax Act”) One of the provisions in the 2010 Tax Act allows individuals age 70 ½ or older to make a charitable contribution directly from their IRA account to an IRC section 501(c)(3) charity. By doing this, the individual avoids paying any Federal, and generally state, income taxes on the IRA funds. IRA distributions are generally taxed at ordinary income rates.
Generally, individuals who are 70 ½ or older must withdraw a specified amount from their IRA each year, called a required minimum distribution (“RMD”). If the taxpayer fails to timely withdraw his or her RMD, the taxpayer is subject to a 50% penalty.
Since the 2010 Tax Act was enacted so late in the year, Congress has allowed taxpayers an extra month to make a 2010 donation. Taxpayers have the option of directing that an IRA, up to $100,000 in value, be donated to a section 501(c)(3) charity through January 31, 2011, and be credited as a 2010 RMD. This IRA distribution and donation will not be subject to federal taxes or penalties, however the contributor will not be eligible for a charitable contribution deduction.
Taxpayers may take advantage of this charitable incentive through December 31, 2011, although starting February 1, 2011, the charitable rollover will be counted as a 2011 IRA RMD.
If you are interested in taking advantage of this tax break by supporting the Children’s Chorus of Washington, please contact the CCW Office at 202- 237-1005 or email us at ccw@childrenschorus.com
