Last Chance to Make a Tax-Free IRA Distribution to Charity?

Under current law, 2011 is the final year a charitable contribution can be made from an IRA, (by an individual age 70 ½ or older), directly to a qualified tax-exempt charity. This type of distribution is called a “qualified charitable distribution”. The distribution is not taxed to the donor, and counts towards fulfilling the required minimum IRA distribution amount (RMDs) that must be withdrawn each year.

If a “qualified charitable distribution” is made, no itemized deduction is allowed. However, since the distribution is not included in taxable income, the 50%-of-AGI limitation that cash contributions are generally subject to does not apply.

Keep in mind that “qualified charitable distributions” cannot exceed $100,000 per year.

 If you are planning to make a charitable contribution and also have IRA’s which require 2011 minimum distributions, you might want to consider a “qualified charitable distribution”. 2011 might be the last year this can be done.