Fiscal Cliff Legislation Extends Charitable IRA Rollovers Through 2013; Special Provision for 2012 Gifts

Fiscal Cliff Legislation Extends Charitable IRA Rollovers Through 2013; Special Provision for 2012 Gifts

Article posted in Legislative on 4 January 2013| 1 comments
audience: National Publication | last updated: 4 January 2013


H.R.8, the "American Taxpayer Relief Act" provides a special opportunity for Charitable IRA Rollover Gifts in 2012 if they are made in January of 2013 reports Memphis, Tennessee attorney Winton Smith. The new law also extends the Charitable IRA Rollover Gift for 2013 Rollover Gifts through December 31, 2013.

H.R.8, the "American Taxpayer Relief Act" extends the Charitable IRA Rollover through December 31, 2013. This means that Donors age 70 and ½ or older can ask their IRA custodian to transfer up to $100,000 in 2013 to a public charity. The transfer will be a totally tax-free transfer to the public charity and thus equivalent to a 100% charitable deduction which is not subject to the normal charitable giving limit of 50% of adjusted gross income. There is of course no separate charitable deduction for the tax-free transfer to the public charity. 

There is also a special opportunity in January of 2013 to make a 2012 Charitable IRA Rollover gift if the donor received an IRA distribution in December of 2012. Because the Congress did not extend the Charitable IRA Rollover provision during 2012, the Fiscal Cliff legislation also states that donors may treat an IRA distribution made after November 30, 2012 as a 2012 Charitable IRA Rollover gift if the recipient of the December distribution makes a charitable gift of the December distribution to a qualified charity before February 1, 2013. This means that a donor who received an IRA mandatory distribution or other distribution during December of 2012 may choose to make a charitable gift in January of 2013 to a qualified charity and it will be treated as a 2012 Charitable IRA Rollover gift. The normal rules apply: the donor must be 70 and ½ and the amount must be $100,000 or a lesser amount and the gift must be made to a public charity.

As in all cases, consult your own advisors who along must assume final responsibility in advising you whether or not this gift is appropriate in your own unique circumstance.

Excerpt from H.R.8, the "American Taxpayer Relief Act"


(a) IN GENERAL .—Subparagraph (F) of section 408(d)(8) is amended by striking “December 31, 2011” and inserting “December 31, 2013”.


(1)         EFFECTIVE DATE .—The amendment made by this section shall apply to distributions made in taxable years beginning after December 31, 2011.

(2)         SPECIAL RULES .—For purposes of subsections (a)(6), (b)(3), and (d)(8) of section 408 of the Internal Revenue Code of 1986, at the election of the taxpayer (at such time and in such manner as prescribed by the Secretary of the Treasury)—

(A)        any qualified charitable distribution made after December 31, 2012, and before February 1, 2013, shall be deemed to have been made on December 31, 2012, and

(B)        any portion of a distribution from an individual retirement account to the taxpayer after November 30, 2012, and before January 1, 2013, may be treated as a qualified charitable distribution to the extent that—

(i)          such portion is transferred in cash after the distribution to an organization described in section 408(d)(8)(B)(i) before February 1, 2013, and

(ii)         such portion is part of a distribution that would meet the requirements of section 408(d)(8) but for the fact that the distribution was not transferred directly to an organization described in section 408(d)(8)(B)(i).

Winton Smith is a practicing attorney who specializes in estate tax strategies and tax planning, financial development and planned giving for charitable organizations. His background includes more than 20 years of practical experience in structuring and marketing major gifts. He represents both individual philanthropists and charitable institutions, keeping them informed of the latest tax law changes affecting charitable gifts.

Winton's ability to present the many complex subjects involved in charitable giving in an easy-to-understand manner sets him apart from other lecturers. He conducts the Council for the Advancement and Support of Education (CASE) Planned Giving Institute in various cities across the country each year, and is the only CASE presenter to consistently receive top ratings for his delivery of the course, "Introduction to Planned Giving."

Winton has been a frequent speaker at programs sponsored by the National Council on Planned Giving (NCPG), the National Society of Fund Raising Executives (NSFRE) and the Association for Healthcare Philanthropy (AHP). He regularly presents charitable tax strategy seminars and workshops for bar associations, estate planning councils, colleges, universities, law schools and hospitals, as well as natural resource and conservation, religious, social welfare and other charitable organizations. Winton's programs on charitable gift planning have been approved for continuing education credit by State Bar Associations and State Accountancy Boards.

 Mr. Smith can be reached at 800-727-1040 or and welcomes your inquiries.

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Re: Fiscal Cliff Legislation Extends Charitable IRA ...

Does anyone know how a taxpayer will prove that the 2013 contribution came from a 2012 IRA distribution and how this will be reflected on the taxpayer's 1040? Thanks.

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