For higher income earners (who may pay tax at higher rates in 2011) and those who wish to pay the tax this year, a charitable gift in 2010 can help you offset your Roth conversion tax. This is because the tax savings from your charitable deduction will result in a dollar-for-dollar offset on your 2010 income.

Here are two charitable gift options for you to consider:1. Outright Gift Make a gift of cash, stock or other appreciated property into your own donor-advised fund and receive a

charitable income tax deduction that will save you taxes this year. Your donor-advised fund can then be used at your discretion and timing to support your favorite charitable causes.

2. Life Income Gift Consider making a gift to fund a charitable gift annuity or charitable remainder unitrust that will provide you with income for life and a current charitable deduction. Ask us about the best income option for your needs.

Given the taxes you could owe on your Roth conversion, you can see why generating tax savings from a charitable gift makes sense in 2010.

Roth Conversion Tax Considerations

The Benefit of Making a 2010 Charitable Gift

In 2010 Roth IRA conversions became more attractive for incomes over $100,000.

Conversions from a traditional IRA to a Roth IRA became more attractive in 2010 because the income limits on conversion were eliminated.

Prior to 2010, if you made more than $100,000, you couldn’t convert to a Roth. For 2010 only these limits are gone.

While you still can’t contribute to a Roth in 2010 if your income exceeds $114,000 or $166,000 (if you are filing jointly), you can make a conversion. The possibility of future tax-free withdrawals makes 2010 IRA conversions attractive.

Keep in mind that you may be taxed at ordinary income levels on your Roth conversion, since your traditional IRA was funded with pre-tax dollars. There are several Roth conversion tax options for you to consider:

• Elect to pay the tax in 2010 when you make the conversion.

• Spread out the taxes on your conversion over the 2011 and 2012 tax years. (The federal government will permit deferral of the tax on a 2010 Roth conversion.)

• Make a charitable gift in 2010 to offset the tax.

Please consult with your financial advisor to see how a conversion impacts you.Offset Taxes this Year

through Charitable Giving

If you are planning to convert your IRA to a Roth IRA in 2010, consider making a chartiable gift to offset the tax on your conversion.

A gift to your donor-advised fund at the Community Foundation, will provide you with an immediate income tax deduction as well as help you to support one or more of your favorite charities over time.

Many people will make conversions in 2010 because of the benefits of a Roth IRA:

• Tax-free IRA growth of assets• Future tax-free withdrawals• No required minimum distribution at age 70½

However, there will be a tax cost to the conversion. This brochure is designed to show how a charitable planned gift can help you offset the taxes on your Roth IRA conversion.

Since 1989, the Orange County Community Foundation has been helping individuals, families, foundations and companies achieve their philanthropic and financial objectives while supporting the causes they care about most.

Twenty years of experience and $155 million in cumulative granting have provided the Community Foundation with broad and deep knowledge of local challenges, opportunities, and effective approaches to meeting community needs.

Our goal at the Orange County Community Foundation is to provide a simple, one-stop service to assist donors with their charitable giving. We offer a variety of philanthropic options tailored to address your specific giving needs and preferences.

To learn more about the Roth IRA Conversion or how the Community Foundation can help you, please contact our Development and Gift Planning department at 949.553.4202, or visit us online at www.oc-cf.org.

30 Corporate Park, Suite 410, Irvine, CA 92606Phone: 949.553.4202 • Fax: 949.553.4211

2010 Roth IRA Conversion

Charitable Possibilities

www.oc-cf.org

About the Orange County Community Foundation

Did you know that the income limits for conversion of a traditional IRA to a Roth IRA are gone?