On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the Tax Relief Act). This law extends the Individual Retirement Account Charitable Rollover (the IRA Charitable Rollover) through December 31, 2011. The IRA Charitable Rollover allows taxpayers who are age 70½ or older to make a tax-free distribution of up to $100,000 from their IRA directly to one or more charities. Such IRA Charitable Rollover can count towards a taxpayer’s minimum required distribution for the calendar year of the distribution.

The Tax Relief Act also allows an IRA Charitable Rollover made prior to February 1, 2011 to be treated as though it were made on December 31, 2010. Taxpayers who have received their minimum required distribution for the 2010 calendar year may not recontribute those distributions to their IRA in order to have them redistributed to a charity as an IRA Charitable Rollover. However, if a taxpayer received a distribution in excess of his or her 2010 minimum required distribution, such taxpayer may roll the excess to another or the same IRA within 60 days of receiving the distribution and have those funds paid directly to a charity as an IRA Charitable Rollover.

IRA Charitable Rollovers are not subject to the charitable contribution deduction limitations since the IRA Charitable Rollover is not included in the taxpayer’s gross income nor claimed as an itemized deduction on the taxpayer’s income tax return.

This provision allows taxpayers to make an additional distribution from their IRA to achieve their charitable goals without increasing their income tax liability. To take advantage of this provision for the 2010 tax year, a taxpayer must make such distribution prior to February 1, 2011.

Non-profit entities may want to notify their donors of this provision.

If you have any questions regarding the IRA Charitable Rollover, please feel free to contact a member of our Non-Profit Practice Group for additional information.