Dec. 31 is Deadline for Charitable IRA Rollover

4:46 pm Tax Planning

ira e1346184593476 Dec. 31 is Deadline for Charitable IRA RolloverFor owners of IRA accounts over the age of 70 ½, there are only two more weeks to take advantage of the opportunity to save on taxes through donating all or a portion of your required minimum distribution to charity.

The charitable IRA rollover was extended only through 2013 via the fiscal cliff tax deal last January, although Congress could reauthorize it in the new year.  It allows individuals who are 70 ½ or older to donate up to $100,000 of IRA assets to a charity without having to report the withdrawal as taxable income.  The donated assets can count against your annual required minimum distribution.

This ability to reduce your taxable income will enable you to avoid or reduce a number of tax increases that went into effect in 2013, such as the 3.8% tax on net investment income for those with an adjusted gross income of $200,000+ ($250,000 for married couples).

A charitable IRA rollover can also help those individuals with an AGI over $85,000 or couples with an AGI over $170,000 to avoid or reduce taxes on Social Security benefits and sidestep higher Medicare Part B and Part D premiums.

To make a charitable IRA rollover in 2013, have your IRA custodian make a direct transfer from your IRA to a qualified charity by Dec. 31.

For more tax-saving strategies, contact our Newport Beach law firm.

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