The Vegetarian Resource Group Blog

Giving Minimum Required IRA Distributions to Charity

Posted on January 09, 2013 by Nina Casalena, The VRG Blog Editor

According to Forbes, the fiscal cliff deal had a special tax break for cash donated by seniors to charity in Jan. 2013.

It’s a variation on the rule that allows those 70½ and older to transfer as much as $100,000 per year from their traditional IRAs to charity. The provision last expired at the end of 2011. In the tax deal enacted this week, Congress has extended it through 2013, with a brief window of opportunity for 2012 donations.

Unless an IRA is a Roth, the account owner must take yearly minimum required distributions starting at age 70½ and pay tax on the distribution. With the charitable IRA rollover, as it is called, the donation can count against the minimum required distribution he/she would otherwise be required to take.

Instead of taking money out of an IRA, the owner asks the custodian of the account to send a certain sum directly to charity. Annual minimum distributions have to be taken by December 31st. Congress carved out a compromise for 2012 donations. It only applies to taxpayers who delayed taking their IRA distributions until December. If they donate cash to charity between now and Jan. 31, they can have it count to satisfy all or part of their 2012 minimum required distribution. In 2013, you must ask the IRA custodian to send the distribution directly to the charity.
While there is no income tax deduction for the donor’s contributions, the sum going to charity is not included in gross income

IRA funds donated this way can not be used for contributions to donor-advised funds, supporting organizations or private non-operating foundations. Otherwise, the money can go to any organization to which you can make a gift that would qualify as a charitable deduction on your tax return.

This is not personal tax or legal advice. Please speak to your lawyer or financial advisor.

To donate to The Vegetarian Resource Group, visit www.vrg.org/donate, call (410) 366-8343, or write to The Vegetarian Resource Group, P.O. Box 1463, Baltimore, MD 21203.

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