Charitable Planning With Individual Retirement Accounts

The American Taxpayer Relief Act of 2012 was passed into law...in the early hours of 2013. We would like to bring to your attention a provision that, while having received little notice in the press, could be a valuable opportunity to you. Further, you may be able to take advantage of this provision retroactively to 2012, but only if you act before February 1, 2013.

Background

Upon reaching age 70½, an individual owning a traditional IRA is required to take annual minimum withdrawals or face penalties. This Required Minimum Distribution ("RMD") is computed based upon the value of the IRA and the age of the account owner, and is taxed at ordinary income rates.

Under current law, donations to public charities are deductible for income tax purposes, but the deduction is generally limited to 50% of a taxpayer's adjusted gross income (total income before itemized deductions); contributions in excess of the limit can be carried forward for the next five years.