The IRA distribution rules allow for the tax-free treatment of distributions from IRAs where the distributions are donated to charity. This provision is available to taxpayers age 70½ or older who have one or more IRAs and a desire to make charitable contributions. Specifically, a taxpayer may exclude from gross income so much of the aggregate amount of his or her qualified charitable distributions not exceeding $100,000 in a tax year. A qualified charitable distribution is any otherwise taxable distribution from a traditional IRA or a Roth IRA that is made directly to a qualified charitable organization.
For purposes of the required minimum distribution (RMD) rules as they apply to individual retirement accounts and individual retirement annuities, qualified charitable distributions may be taken into account to the same extent that the distribution would have been taken into account under the RMD rules had the distribution not been directly distributed under the IRA qualified charitable distribution rules. Thus, an IRA owner who makes an IRA-qualified charitable distribution in an amount equal to his or her RMD for the tax year is considered to have satisfied their minimum distribution requirement for that year, even though a charitable entity (and not the IRA owner) is the recipient of the distribution.
This favorable provision expired at the end of last year, but was recently extended for 2012 and 2013 by the American Taxpayer Relief Act of 2012.
Please contact Martini, Iosue & Akpovi by phone at (818) 789-1179 if you have questions or want more information on this tax-saving opportunity.