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Charitable IRA legislation is back for 2010 and 2011
Special to the Denver Catholic Register
Gerald J. “Bud” Laber, president of The Catholic Foundation, announced that in recent tax legislation, Congress has extended the IRA charitable rollover for calendar years 2010 and 2011.
The Catholic Foundation is an independent community foundation. It grants an average of $5 million per year in support of the Archdiocese of Denver, Catholic schools, parishes, the seminaries, and other religious and charitable organizations that depend on the support of northern Colorado Catholics to carry out the mission of the Church.
“This new law gives Catholics, ages 70 1/2 and older, an excellent opportunity to make significant gifts to The Catholic Foundation, Catholic schools, parishes, the seminaries or other activities of the Church,” Laber said. “Normally, a distribution from an IRA is taxed as ordinary income; however, the federal tax legislation just enacted allows a donor to make direct charitable gifts from their IRA without the distribution taxed as income to that donor. Additionally, the new law also provides that you may consider an IRA distribution made in January 2011 as made in 2010.”
The IRA charitable rollover law may provide a good charitable giving vehicle to Catholics who are age 70 ½ and take the standard deduction rather than itemize deductions on their tax return. The law may also reduce the tax impact on a donor’s Social Security benefits. An IRA could be considered a special fund for distributions in support of Catholic activities without the normal consequences of reporting additional taxable income.
The distribution must be from an IRA, not 401(k) or other retirement plan. Donors are encouraged to consult with their financial or tax advisor about the possibility of transferring funds from one of these other plans to establish an IRA, with the distribution to charity coming from the newly established IRA. Laber said the Catholic Foundation maintains a referral list of attorneys and accountants who understand and support the charitable goals of northern Colorado Catholics.
“The IRA distribution must be a direct charitable gift and not a distribution to a donor-advised fund, a charitable remainder trust or for a charitable gift annuity,” he said. “Catholics who are eligible are encouraged to take advantage of the IRA charitable rollover to support the Church in northern Colorado.”
Laber shared the following tips on how to handle one’s IRA charitable rollover gift:
- Contact your IRA custodian or representative before making a gift to arrange for the proper transfer of funds from your IRA. The check issued from the IRA must be made payable to the entity you are making the gift to.
- If a donor elects to have income tax withheld from their normal IRA distributions, they should advise their IRA administrator not to withhold taxes from the distributions to the entity receiving the gift.
“As the planned giving provider for the Church in northern Colorado we are excited to share another opportunity to increase financial support for Catholic missions and ministries,” said Laber.
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