On December 17, 2010, President Obama signed the much-anticipated Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Among other things it includes or extends provisions that benefit donors and charitable organizations. One of the most exciting provisions on charitable donations is the extension of the Charitable IRA Rollover. This law allows people who are 70 ½ or older to make tax-free transfers of up to $100,000 per year from a Traditional IRA or Roth IRA directly to charity. The law was originally effective for 2006 and 2007 and then twice extended through 2009. It was allowed to expire on January 1, 2010, however.
The new law extends the charitable IRA rollover for two years by allowing gifts completed in January of 2011 to be treated as if they were made on Dec. 31, 2010 and also allows transfers through the end of 2011.
According to early information collected by the Partnership for Philanthropic Planning (PPP) from more than 900 nonprofit organizations, hundreds of millions of dollars in donations have gone to charity through IRA distributions. At the time of their report, the average distribution was over $16,000 with the most common distribution was $5,000.