IRA Charitable Rollover Extended: You Can Still Benefit Now for 2010

January 20, 2011

You still have time to make a charitable donation in January 2011 to count for calendar year 2010, if you did not already meet your Required Minimum Distribution (RMD) from your IRA. The IRA charitable rollover allowing up to $100,000 to charities was reinstated as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, signed by President Obama on December 17, 2010. Effective retroactively from December 17, taxpayers 70 ½ and older can directly donate funds from their IRA tax-free until January 31, 2011, and have it be credited to calendar 2010. If you turned 70 ½ during 2011, this opportunity extends through April 1, 2011.

The IRS normally collects tax every time you withdraw from your IRA. With the charitable rollover, you can withdraw up to $100,000 tax-free if those funds are directly given to registered charities. If your IRA contains before-tax and after-tax dollars, under the new law, you will be donating funds that have a higher tax liability and leaving a higher percentage of after-tax dollars in your IRA.

The charitable donation counts to fulfill your RMD and keep down your Adjusted Gross Income (AGI). It also cures errors in not having taken proper RMD's during 2010.  If you have already met your RMD, this only applies if you want to give incremental dollars to charity.

Please contact your Perelson Weiner Partner for more information regarding your 2010 and 2011 RMDs.

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