Taxpayer Relief Act Affects Tax Impacts of Charitable Giving

The American Taxpayer Relief Act of 2012 (H.R. 8) has been approved by Congress and signed by President Obama. This legislation was passed to address some of the so-called 'fiscal cliff' of automatic tax increases and federal spending cuts that would have taken place in its absence.

While the Act contains several stipulations, the one that affects donors relates to charitable giving of IRA. An IRA owner can take advantage of the IRA qualified charitable distributions (QCDs).* As a result of the Act, in 2012 and 2013, an IRA owner age 70½ or older can contribute up to $100,000 of IRA assets per year tax-free to qualifying charities. This provision previously expired December 31, 2011. Because of the late timing of this extension, the Act provides for transition relief allowing certain distributions taken in January of 2013 to be considered qualifying QCDs for 2012. Because this extension is "seamless," any otherwise-qualifying IRA distribution paid directly to a charitable organization at any time during 2012 is recognized as a QCD.

If you are considering making a gift to Ministerial Relief and Assistance, now is a great time. The giving incentive is particularly beneficial to individuals who do not itemize their tax deductions and would otherwise not receive any tax benefit for their charitable contributions. Again, however, charitable donations from employer-sponsored retirement plans are not eligible for this tax-free treatment.

For more information about IRA charitable contributions as authorized by the American Taxpayer Relief Act, contact Pension Fund at 1.866.495.7322 or pfcc1@pensionfund.org. For additional details on the Act, including the effects on Coverdell Education Savings Accounts, visit www.ascensus.com.

* Charitable donations from employer-sponsored retirement plans, such as pension plans, 401(k)s, 403(b)s and 457s - are not eligible for this tax-free treatment.