Set to Expire: Direct Distributions from an IRA to a Qualified Charity
[Return to list]- Title:
- Set to Expire: Direct Distributions from an IRA to a Qualified Charity
- Date:
- October 3, 2011
- Publication:
- From the October 2011 Riker Danzig Tax and Trusts & Estates Update
- Author(s):
- Andrew J. Stamelman, Sandra Brown Sherman, Robert C. Daleo, William C. Connelly, Anthony Fernandez, James A. Mohoney, Heidi I. Hansen, Vanessa Ann Woods, Tracy M. Child
- Area(s) of Practice:
- Estate Planning & Administration, Tax
The direct IRA charitable distribution provision originally included in the 2006 Pension Protection Act and most recently extended as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, is set to expire at the end of this year. This provision gives older taxpayers the ability to exclude up to $100,000 per year from their federal income when they make a "qualified charitable distribution" directly from their IRA. Couples with separate IRAs may exclude up to $200,000 per year.
To qualify for this exclusion from your federal income tax, you must have attained age 70 ½ on the date of the distribution to charity, the distribution must occur on or before December 31, 2011, and the distribution must be directly transferred from the IRA to a public charity (or certain private foundations that make immediate distributions of the contributions). Distributions to a donor advised fund or a supporting organization are specifically excluded from the definition of a "qualified charitable distribution", and therefore do not qualify for this exclusion. Remember, it is imperative that you receive a contemporaneous written acknowledgement of the gift from the charitable donee if the amount of the gift is $250 or more.
Another benefit of this exemption is that the charitable distribution counts toward the donor's annual required minimum distribution that must be withdrawn each year after the IRA owner attains age 70 ½.
Finally, as mentioned above, this extended provision applies to distributions from traditional IRAs.[1] Also, as mentioned in our December 2008 Tax and Trusts & Estates UPDATE, any distribution from an IRA that would otherwise be considered income for New Jersey Gross Income Tax purposes will continue (at least at this point) to be taxed as pension and annuity income on your New Jersey Income Tax Return (Form NJ-1040), even if those funds constitute a "qualified charitable distribution" for federal income tax purposes.
There is a very short window of opportunity to take advantage of this incentive. If you need assistance finalizing the transfer before the end of the year, please contact us.
_____________________________________________
[1] Although the provision also applies to Roth IRAs, there would be little tax reason to distribute a Roth IRA to charity, since Roth distributions are tax-free to non-charitable distributees. Also, 401(k) plans, 403(b) annuities, defined benefit and defined contribution plans, profit-sharing plans, etc., are not eligible.
Site Tools
Firm Clients
- AXA Corporate Solutions
- Highlands Insurance Group, Inc.
- Kemper Group of Insurance Companies
- Diamond Chemical Co., Inc.
- Capacity, L.L.C.
- Bouras Industry, Inc.
- Mutual Marine Office, Inc.
- Dittman Incentive Marketing Corp.
- Geptek, Inc.
- Genpro, Inc.
- Ecko Complex, L.L.C.
- Jacobs Engineering
- Modell’s Sporting Goods
- New York Life Agents Reinsurance Company
- Porky Products
- Glamorise Foundations, Inc.
- Proformance Insurance Company
- Solix, Inc.
- Zootoo, LLC
- HSBC Bank
- Banc One
- Prudential Insurance Company
- Lexent Inc.
- Playtex Products Corporation
- North Fork Bank
- Hertz Corporation
- Meow Mix Corporation
- Aeon (U.S.A.), Inc.
- BEA Systems, Inc.
- Bouras Industries, Inc.
- Cameco, Inc.
- C&S Wholesale Grocers, Inc.
- Corporate Fuel Partners
- Bed Bath & Beyond, Inc.
- Dainippon Sumitomo Pharma America, Inc.
- GDC Properties
- Gerber Products Company, Inc.
- Foundation Venture Capital Group LLC
- Ginsburg Development Companies LLC
- Lloyd, Gerstner & Partners, LLC
- McDonald Information Services, Inc.
- Morris Energy Group, LLC
- New York Life Agents Reinsurance Company
- Promident LLC d/b/a Johnson-Promident
- Shipley & Halmos, LLC
- Solix, Inc.
- Wakefern Food Corporation
- WR Capital Partners LLC
- Zenith Optimedia, Inc.
- Dames and Moore
- E.I. Associates
- Herval Construction, Inc
- Parsons Engineering Science, Inc.
- R2D Corporation
- Perini Construction Corporation
- West Morris Regional High School Board of Education
- Casino Reinvestment Development Authority
- Columbia Gas Transmission Corporation
- Bank of America
- Citibank, N.A.
- HSBC Bank
- Provident Bank, etc. v. Edward V. Giannasca (N.Y. App. Div.)
- The Bank of New York
- Alea North America
- AXA Versicherungs AG
- CIGNA
- Alea London Limited
- British International Insurance Company
- Brittany Insurance Company (London)
- Chubb Group of Insurance Companies
- American International Management Association
- Compagnie Europeenne D’Assurances Industrielles S.A.
- Crown Life Insurance Company
- Crum & Foster Insurance Group
- Colonia Insurance Company
- Delta Lloyd Insurance Company Limited
- Dukes Place Holdings, L.P.
- EMC Insurance Companies
- Enstar Group Limited
- Enstar US Inc.
- Excess Insurance Company Limited
- Harleysville Insurance Companies
- Harper Insurance Limited f/k/a Turegum Insurance Company
- Enstar (EU) Limited
- National Casualty Company of America Limited
- Mutual Marine Office, Inc.
- Hudson Reinsurance Company Limited
- Highlands Insurance Group, Inc.
- Management Facilities Corporation
- National Casualty Company of America Limited
- Navigators Insurance Company
- New York Marine & General Insurance Company
- Unique Settings of New York
- Siemens Corporation
- McKessen Corp.
- York Claims Service, Inc.
- Gavan-Graham Electrical Products Corp.
- Triad Consulting Engineers, Inc.
- Jacobs Engineering
- Bayonne Parking Authority