From The Tax Advisor, 4/21/16 –
Sec. 408(d)(8) permits “qualifying charitable distributions” from traditional IRA or Roth IRA accounts to be excluded from gross income. The provision first appeared in the Pension Protection Act, P.L. 109-280, in August 2006, as a temporary measure. In the intervening years it lapsed and was revived several times. The Protecting Americans From Tax Hikes (PATH) Act of 2015, P.L. 114-113, made it permanent. It is a powerful incentive to charitable giving, and through the use of life insurance, the ultimate amount the charity receives can be substantially increased.
What is a “qualifying charitable distribution”?
The requirements are relatively simple. The charitable distribution must be:
From a traditional IRA or a Roth IRA;
Direct from the IRA trustee to the charitable organization—with no intervening possession or ownership by the IRA owner;
On or after the IRA owner has reached age 70½; and
A contribution to an organization that would qualify as a charitable organization under Sec. 170(b(1)(a), other than a private foundation or donor advised fund.
By David K. Smucker, CPA