IRA charitable rollover is back for 2012 and 2013!

What does it mean for you?

It is official, President Obama signed the American Taxpayer Relief Act (ATRA) of 2012 into law on January 1, 2013. The new law gives taxpayers some certainty for at least another year; one important component of the ATRA is the IRA charitable rollover:

• Donors 70½ or older are once again eligible to move up to $100,000 from their IRAs directly to qualified charities without having to pay income taxes on the money.
  

Because of the late extension*:

• The law is retroactive up to January 1, 2012, for those donors who made a qualified charitable distribution during 2012 in hopes that the law would be retroactive.
• Qualified distributions made through January 31, 2013, may be counted retroactively for the 2012 tax year. This means a donor can transfer up to $100,000 in January 2013 and up to $100,000 February – December 2013.
• A taxpayer who took a distribution from an IRA in December 2012, may make a contribution to a qualified charity before February 1, 2013, and treat this as a direct transfer. This is only for December 2012 distributions.

How does the IRA charitable rollover work?

Say you have $500,000 in an IRA and will be required to withdraw approximately $25,000 this year. You can authorize the administrator of your IRA to transfer all or a portion of the withdrawal to Austin Seminary. If you decide to contribute $20,000 and have $5,000 distributed to you, the $20,000 will count toward your annual minimum distribution, but will not be subject to tax.

Qualified distributions can total up to $100,000 for tax year 2013. If your spouse has a separate IRA account, you can each contribute up to $100,000 in tax year 2013. You cannot claim a charitable deduction for IRA gifts.

*Remember the exceptions above because of the late passing of the law – IRA gifts made in January 2013 can be counted in the 2012 tax year.

How can your IRA withdrawal qualify as a tax-free gift?

• You must be 70½ or older at the time of the gift.
• Transfers must be made from a traditional or Roth IRA account directly from plan provider to qualified charity, like Austin Seminary. Funds you withdraw and then contribute do not qualify. *Remember the exceptions above because of the late passing of the law – taxpayers who took distributions in December of 2012 can make a direct gift in January 2013 and count it like a direct transfer.
• Qualified distributions may NOT be made to donor-advised funds, supporting organizations, or life-income arrangements.

For additional information or questions, contact Lisa Holleran at 512-404-4803 or lholleran@austinseminary.edu.