Charitable “rollover” program extended through January

Charitable “rollover” program extended through January

It’s not too late to discuss charitable giving strategies with your clients.

The recent passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 also extended a program that allows retirees to take tax-free withdrawals from IRAs and to take a 2010 deduction for donations made by the end of January 2011.

The provision, which had expired at the end of 2009, allows retirees age 70½ and older to donate up to $100,000 tax free coming from a Traditional IRA each year. Generally, an IRA distribution is considered taxable income. But by donating the money directly to a charity, the distribution is not included in the calculation of income. Donors are also entitled to a 100% deduction.

The new law reinstated the provision and extended the option for 2010 and 2011 charitable contributions. Also, a special rule was put in place that IRA distributions sent to a charity through January 2011 may be considered charitable contributions for either tax year 2010 or 2011.

Many investors may believe that once the year concludes, it is too late to consider a charitable donation. Because of the timeliness of the special rule, you may want to contact your clients as soon as possible to let them know about this option.

Learn more with our Donating IRA assets to charity investor education piece.

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