Trust and Estate Counsel

Tennessee Estate Planning Law

Insight and commentary on estate planning issues impacting affluent residents of Tennessee

Too Late To Avoid Tax On 2010 IRA Distributions

A previous article explained that IRA account holders who did not make a charitable distribution in the last two weeks of 2010 can make a $200,000 Charitable IRA Distribution in 2011, provided that at least $100,000 of the distribution is made by January 31, 2010. One of my clients asked whether there is any way for him to convert his 2010 required minimum distribution (“RMD”) into a charitable distribution.

My client took his RMD of $82,000 on December 1st prior to going to Florida for the winter. He would now like to give the $82,000 to charity so that he does not have to pay tax on the RMD. Unfortunately, there is no way for him to avoid paying income tax on the RMD.

He can make an $82,000 distribution from his IRA to charity in January, 2011. If he had not taken the RMD in 2010, he could treat the January distribution made to charity as a non-taxable RMD for 2010. However, since he already received the $82,000 as a taxable RMD, the January gift will not help him to reduce his 2010 income taxes.