Federal legislation recently made permanent an individual taxpayer ability to make charitable contributions directly from his or her IRA. These contributions are made directly from the IRA to the public charity are not taxed as income to the taxpayer subject to the following requirements: (i) individual making the contribution must be at least 70 1/2 years of age on the date of the contribution; and (ii) contributions of up to $100,000 per individual per year (or $200,000 for married taxpayers filing a joint return ). Contributions in excess of the $100,000 ($200,000) amount are treated as taxed withdrawals which are then donated to charity.
Individuals over age 70 1/2 with traditional IRAs or Roth IRAs will benefit the most if they (1) have already used (either directly or via carry-over) their entire charitable deduction allowed under Section 170 of the Internal Revenue Code during the taxable year; (2) want to make charitable contributions but do not itemize deductions; or (3) have income above the applicable threshold such that deductions under Section 170 of the Internal Revenue Code are not “dollar for dollar” deductions.
