The option to make a qualified charitable distribution from your Roth or traditional IRA is once again available for 2010 and 2011. And even though 2010 is officially over, you can take advantage of a special rule that treats a distribution taken in January 2011 as if you made it in 2010.
Here’s a refresher on how the IRA charitable distribution works.
* You must be age 70½ or older at the time of the distribution.
* The distribution can come from your traditional and Roth IRAs, but not from SEP or SIMPLE retirement plans.
* The distribution must be made directly from your IRA to an eligible charity. Donor advised funds are not eligible recipients.
* The distribution will count as part of your required minimum distribution. You can elect to have a distribution made in January 2011 applied to your 2010 RMD.
* You can exclude the contribution from your taxable income, though you won’t be able to take an itemized deduction for it.
* The maximum amount you can exclude from income as a qualified charitable distribution is $100,000. When you’re married filing jointly, the limit applies to each of you separately.
Please call if you’re thinking of donating money from your IRA to charity. We’ll be happy to help you make sure the transfer stays within the rules.David Bradsher, CPA