President Obama has signed into law a tax bill that temporarily extends both the federal estate tax and the IRA Charitable Rollover. Signed on Dec. 17, the bill had been passed by both the House (277-148) and the Senate (81-19).

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 extends the IRA Charitable Rollover provision that expired at the end of 2009.

"This represents a great opportunity for members of UCC communities to invest in ministry using their retirement assets without adverse tax consequences, as many UCC folks did for their local churches and the national ministries the last time this was available," says Don Hill, minister and team leader for financial development in the UCC's Office of General Ministries.

The legislation allows any eligible gifts made by Jan. 31, 2011, to be treated as a 2010 donation. The new expiration date for the rollover is Dec. 31, 2011, so all eligible gifts made throughout 2011 qualify for favorable tax treatment.

"We encourage families to consult with their financial advisors to make this a part of their plans for 2010 and 2011," says Hill.

Since the IRA Charitable Rollover first was passed in 2006, thousands of donors have enjoyed the benefits of this gift strategy.
 
"The rules are essentially the same as the original 2006 legislation," says Lynne Hansen, associate for legacy gifts in the UCC's financial development ministry. "This is for outright gifts only – one cannot fund a life-income gift (CGA, PIF, CRT) with an IRA rollover."

The rollover allows taxpayers, starting at age 70½, to direct up to $100,000 per year from their IRAs to eligible charities without counting the distributions as income for tax purposes.

"The distribution must be made by the IRA plan administrator directly to the charity," adds Hansen.

The gift must be to a public charity, either outright or for a specific purpose, but may not be to a donor-advised fund or supporting organization.

Donors do not receive a charitable deduction. While they will receive an IRS Form 1099 showing the distribution, it will not be taxable as long as it is made directly to the charity. The charitable transfer qualifies for, or toward, the donor's required minimum distribution.