Roth IRA conversions can lead to charitable donations

In 2010, everyone regardless of income can convert their existing Traditional IRA into a Roth IRA.  Previously, if your adjusted gross income was over $100,000, you were precluded from doing such a conversion. This could be an important fundraising opportunity for many nonprofits. 

 The expectation of higher tax rates, and the Roth IRA’s ability to build or transfer wealth on a tax-free basis has led many donors to consider a conversion.  Because conversions are taxable for most people, donors need to know that instead of writing a check to the IRS, they could potentially make a donation to their favorite charity as an offset to some or all of their taxes on the conversion. 

For 2010 conversions only, converters have the option to split the tax burden over tax years 2011 and 2012.  Consult with your investment officer or advisor on how to use this opportunity to engage your donors.