Banking & Finance, Law, and Nonprofits

Annual IRA charitable donations law becomes permanent

January 1, 2016
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A law regarding IRA charitable donations that had to be re-enacted by Congress on a yearly basis has now become permanent.

“We can advise people to instruct their planned administrator to make the minimum required distributions to a qualified charity, and the individual who owns the IRA will not have to claim that as income at the end of the year,” said Christopher Matthysse, attorney with Mika Meyers.

Matthysse said previously it was difficult to advise clients to take advantage of the law, because attorneys were never sure it would be re-enacted, but now they can confidently advise clients to take advantage of it.

Matthysse said prior to the law, individuals donating to a charity from their required minimum distributions would have to show the distribution from their retirement account as income on their taxes.

“Then they would claim a charitable deduction for the amount given to charities,” he said.

Matthysse said the law allows for greater tax savings, because it doesn’t show the amount as income at all.

Matthysse said eligible persons must be at least 70.5 years old and can donate up to $100,000.

The law becoming permanent impacts anyone who is required to take minimum distributions and donating to charity, he said.

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