Age 70.5 +? Reduce Taxes as You Pay Your Pledge!

January UUS:E Charitable Contributions by Those Above 70 and 1/2.

Time Is of the Essence.

Reduce your taxes as you pay a pledge or make a gift to UUS:E – The American Taxpayer Relief Act of 2012 (ATRA) was passed earlier in January. This new legislation reinstated a special tax provision called the “IRA charitable rollover.”  It permits individuals age 70 1/2 or above to make direct charitable distributions of any amount up to $100,000 at any time during 2013 from their traditional, rollover, or Roth IRAs without those distributions counting as gross income for federal and state income tax purposes . Sources of funds from 403(b)s, 401(k)s and pension plans are not eligible, although these could be converted (in part or whole) to rollover IRAs to allow direct charitable transfers to be eligible for the tax benefits.  IMPORTANTLY, during the month of January 2013, eligible donors may elect to treat a directed distribution up to $100,000 as being made in 2012, if it is from an IRA custodian to a qualifying charity and is completed in January 2013. Also, if a taxpayer personally received an IRA distribution in December 2012, she or he may transfer an amount equal to what she or he received, up to $100,000, to a qualifying charity in January 2013, and have it count as a 2012 distribution for charitable deduction purposes. This particular January 2013 opportunity (retroactive to 2012) is a one-time exception to the requirement that the transfer be made directly to a charity from the IRA account.  For all other eligible direct charitable 2013 distributions, the IRA charitable rollover extends regular benefits through December 31, 2013, and permits distributions to charitable organizations starting January 1, 2013, to be deemed to have been made in 2013 at the election of the taxpayer. For all IRA or Roth IRA contributions mentioned above, the following requirements must be met:
  • Donor must be at least 70 1/2 years of age at the time of the transfer.
  • The funds must pass directly from the IRA custodian to the qualifying charity, except as otherwise indicated above.
  • There is no federal income tax deduction available for such gifts in addition to their income exclusion benefits.
UUS:E is a qualifying 501(c)(3) institution for these types of direct charitable IRA donation transfers.  Since this is a rather complex matter, if you have questions please contact Hal Reed, Chair of UUS:E’s Endowments and Investments Sub-Committee, at redwind500@aol.com or on his cell phone:  (860) 336-6704.  If you wish to consider a transfer that is retroactive to December 2012, you must act quickly in order to complete it by the deadline of January 31, 2013.    As always, it is important to contact your tax professional to determine how your particular situation is affected by these changes.