With the sign of his name, the President brought several significant changes to the world of estate planning and probate. Yesterday I shared with you updates to the federal estate tax. Today I am pleased to cast the limelight on the topic of IRA gifts to charities.
Since 2006 there has been an on again, off-again tax break for folks aged 70.5 and older, which allowed them to make a gift from their IRA (ROTHs excluded) directly to a charity. The distribution was not considered taxable income for the IRA holder, and the charity did not pay a tax on the gift either. And on January 2, 2013, when the President signed the American Taxpayer Relief Act of 2012 into law, it once again turned this law on.
Under the law, those qualify have until January 31, 2013 to make a gift to a charity and have it count towards a 2012 distribution. And distributions can be made for calendar year 2013 as well, and are capped at $100,000.
So, if you are 70.5 or older, have large balances in an IRA, and wish to make a charity's day, I highly recommend you consult with your attorney and or CPA about how this law impacts your life. Thanks for reading, and I'll be back tomorrow with more on illness, death and taxes for the middle class.