Taxpayers in the U.S. who took required minimum distributions from their Individual Retirement Accounts last year won’t be able to return them to give directly to a charity, the Internal Revenue Service said.
For savers age 70 1/2 and over, the tax bill signed by President Barack Obama last month includes a provision that allows them to donate up to $100,000 from a traditional IRA directly to charity without incurring income taxes. Some taxpayers who had already taken their distributions in 2010 were questioning whether they could return their payouts and then make charitable donations.
“Required minimum distributions (RMD) from an IRA received by a taxpayer cannot be rolled over to an IRA,” according to a statement from the IRS on Jan. 5.
Mandatory distributions from traditional IRAs, which have tax-deferred contributions, must be taken starting at age 70 1/2. Roth IRAs, which are taxed up front and have tax-free withdrawals during retirement, don’t require distributions.
Donors who took their distributions after the bill was signed on Dec. 17, or take them this month, and make direct charitable gifts don’t have to recognize the distributions as income for 2010.
Statistics on how many taxpayers took required minimum distributions in 2010 aren’t yet available, said Eric Smith, a spokesman for the IRS.
Fidelity Investments has received calls about returning IRA distributions from clients and they’ve expressed disappointment that they can’t, said Mike Shamrell, a spokesman for the Boston- based mutual-fund company.
The statement by the IRS was reported by the Wall Street Journal earlier today.
To contact the reporter on this story: Alexis Leondis in New York email@example.com.