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A Planning Plum for that Pesky IRA You Don’t Need Anyway – Part 1

A Planning Plum for that Pesky IRA You Don’t Need Anyway – Part 1

Ok, so this is really late to be writing about this planning tidbit, but the fact is, the current use of this particular technique is very limited – certainly limited enough that I wouldn’t get too excited about it.  Later in the year, though, it may be a different story and I may get excited then.  But until then, I would be remiss if I did not point it out to you so here it is:
Until January 31st, taxpayers aged 70 ½ and older can direct up to $100,000 from their traditional or Roth IRA to a public charity (no private foundations or donor advised funds, please) and elect to include the transaction as if it occurred in 2012.  The distribution from the IRA will NOT be included in income nor will the contribution to charity be deductible.  For 2012, this is helpful mostly for:

  • Those who may have forgotten to take their required minimum distribution (RMD) in 2012 and want to correct the error.  Even though it will not be included in income, any such charitable transfer will count toward the 2012 RMD.
  • Those who bumped up against the income limitations for charitable contributions in 2012 and still want to give more.  Good for you – you are an inspiration to us all.
  • Those who have an IRA that they are looking to clean out during lifetime (for any number of reasons).

Other than that, it really seems to be a last minute planning tool in search of an audience.  Pretty amazing if you ask me, but then again, if the government can print money to try to solve monetary problems, why can’t it rearrange time and space as it sees fit?  The bottom line:  2012?  Not so good.  2013?  Has potential.  Stay tuned for the next edition of “Charitable Nation.”

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