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Charitable IRA Rollover Information
Individuals
can make annual tax-free deductions of up to $100,000 from
their IRAs directly to their their favorite charitable entity. This is
a limited time opportunity to have this qualify as a deduction for tax
year 2009.
Previously, individuals would have had to report any
amount taken from an IRA as taxable income before taking a charitable
deduction for the gift. The charitable gift deduction is limited to 30-
50 percent of your adjusted gross income depending on type of charity
involved. This caused some donors to pay more in income taxes than if
they didn’t make a gift at all.
Fortunately, IRA gifts now can
be accomplished simply and without tax complications. Plus, you can
make the gift now—while you are living and able to witness the benefits
of your generosity.
You may contribute from your IRA if:
* The gift is $100,000 or less each year
* You make the gift on or before December 31, 2009
* You transfer funds directly from an IRA or Rollover IRA in what is
called a trustee to trustee rollover. The gift must go directly from
the bank, IRA custodian or other trustee to the charity.
How the Rollover Works
Claire,
aged 71, has $450,000 in an IRA and wants to donate $75,000 this year
to her favorite charity. If Claire transfers $75,000 from the IRA, she
will avoid paying income tax on that amount, since she never received
it. It went directly to the charity.
How to Make a Donation
1. Send a letter to your IRA custodian requesting a rollover directly
from your IRA directly to the organization of your choice.
2. Notify the organization of your intentions.
Please plan ahead! It can take up to 2-3 weeks for the transfer to take place.
Questions and Answers
I have several retirement accounts, does it matter which retirement account I use?
Yes.
Gifts can be made from an IRA or Rollover IRA.
Pension, profit sharing
and other forms of retirement funds do not fall under the new
legislation.
Can I use this opportunity to establish a life income gift such as a charitable gift annuity?
No. The gift made from your IRA must be treated as an outright gift to qualify.
Does the gift count towards my minimum required distribution?
Yes.
Donations made directly from your IRA count towards your minimum
required distribution. This is an especially effective way of giving
for people who find that they do not need all of the income from their
minimum required distribution in 2009.
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