IRA Charitable Rollover Is Back

News Source: Wall Street Journal


When it comes to taxes, never say die.

As part of the “fiscal cliff” deal, Congress has resurrected a popular tax-law provision, known as the “IRA charitable rollover,” that had expired at the end of 2011.

The rule allows many investors 70½ or older to transfer as much as $100,000 a year from an individual retirement account directly to a qualified charity without having to count any of that transfer as taxable income.

The transfer, if done properly, counts toward the taxpayer’s required minimum distribution for that year.

And there still is time for some people this month to take advantage of the rule for 2012. “Charitable rollovers can be made in January 2013 for 2012, and individuals who took mandatory distributions in December 2012 can donate that money to a public charity and not have the distribution subject to tax,” according to Independent Sector (, a Washington-based nonprofit, nonpartisan coalition of charities, foundations and corporate philanthropy programs.

According to a Senate Finance Committee document, the law is scheduled to “sunset,” or die, at the end of 2013. What will happen after that? That’s anybody’s guess.

Ever since the law died at the end of 2011, readers have been asking me whether there was any chance that it would be revived for 2012. I replied that the chances were very good because of the enthusiastic support from influential charities. Although this provision enjoyed bipartisan support, it became wrapped up in the overall tax struggle that wasn’t resolved until very recently.

Charitable organizations lobbied hard to have the law brought back. They said it had encouraged many people in prior years to make donations that might not otherwise have been made.

Independent Sector said in a statement that “we are also heartened that the agreement does not provide any direct limitations on the charitable deduction, and that key giving incentives, including the IRA charitable rollover, as well as enhanced deductions for the donation of food and land for conservation purposes have been reinstated and extended through the end of 2013.”

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