IRA Rollver
Charitable IRA Donor Information
Charitable IRA ROLLOVER LAW EXTENDED
Donate Directly From Your Traditional or Roth IRA!
If you are 70 ½ years or older, or handle financial matters for an older loved one, you need to know that The Financial Rescue Package passed by Congress in October 2008 included a two-year extension of the IRA Rollover Provision.
This extension was made retroactive to January 1, 2008. It provides tax incentives for donors age 70 ½ years who use IRA funds to make charitable gifts through December 31, 2009.
Taxpayers age 70½ years and older are required to take annual distributions from their IRAs. The distributions are taxed along with other sources of income. The Charitable IRA Rollover permits taxpayers to transfer gifts directly from their IRA to the charity without including it as income and without you paying taxes on the total amount of the gifts.
Do you Benefit from the IRA Charitable Rollover?
Do you have several sources of retirement income?
If other sources of income are available, a tax-wise choice for charitable giving is to use IRA funds that would be subject to tax if withdrawn voluntarily, or taken as a mandatory minimum distribution.
What if you do not itemize your deductions?
A majority of Americans do not itemize deductions on their annual income tax returns. As a result, they do not receive a tax benefit for their charitable contributions. Those that do not itemize include lower and middle income taxpayers as well as higher-income individuals estimated to be over 5 million.
Taxpayers who do itemize and have reached the charitable giving limit.
Individuals who do itemize can only deduct 50% of their adjusted gross income. But donations from IRAs are excluded from this limit allowing donors who have reached the 50% threshold to give more.
Taxpayers whose deductions go down as their income goes up.
Individuals making donations from an IRA (rather than taking a distribution that qualifies as income) can keep their income down and possibly qualify for other tax deductions.
What You Need to Know
- Donors must be 70 ½ years or older.
- Gifts for tax year 2009 must be made no later than December 31, 2009.
- Donors can contribute any amount up to $100,000. A couple with separate IRAs can EACH contribute any amount up to $100,000.
- Your gift must be made directly from the IRA to the charity and the organization must be a qualified charity. If you withdraw funds directly and then personally contribute to the charity separately, amounts withdrawn will be included in the donor's gross income.
- Your IRA rollover transfers cannot be made to charitable trusts; donor advised funds, foundations, supporting organizations or split interest vehicles such as remainder trusts.
