CHARITABLE IRA ROLLOVER
IRA funds are heavily taxed whenever you draw them out, at rates as high as 35%. What’s more, the tax burden never goes away – even your heirs will pay income tax on IRA funds they receive from your estate, and federal estate taxes may apply, as well. In 2006 and 2007 you can augment your usual gift to qualified organizations by the amount of tax that otherwise would have come due on your required distribution.
Suppose you normally send us a check for $1,000 every year. Instead of writing a check, you could instruct your IRA trustee to send us $1,333 (assuming you are in a 25% tax bracket.) If you had withdrawn $1,333 from your account, the tax would have been $333 in a 25% bracket. That $333 now can be used for our programs – and you will have increased your support by one-third, paid for by the IRS.
Important: IRA gifts, under this special tax law, must be made by the trustee or custodian of your IRA. Please call us with any questions about planning gifts from your IRA.
Congress has passed the IRA Charitable Rollover for 2008 and 2009. Click here to read informative articles and call us at 214-615-9351 for more information.
IMPORTANT LINKS
IRA Charitable Rollover Analysis
Legislative Alert from Conrad Teitell
Our Postcard: A Summary of the New Law
Rule Change makes Giving to Charity from IRAs Easier
Case Study: The Social Security IRA Rollover Donor
Securities Industry Association Seeks Guidelines on Charitable IRA Distributions
IRA Gift Rule Book Under This Special Tax Law
Donors must be past the age of 701/2 and own a traditional or Roth IRA – other retirement plans such as pensions, 401(k) plans and others are not eligible.
Only the IRA trustee can transfer gift amounts to a qualified organization. If IRA owners withdraw funds and then contribute them to charity separately, amounts withdrawn will be included in the donor’s gross income.
No charitable deductions are allowed, but gift amounts will not be included in donors’ incomes.
IRA transfers will count toward your “minimum distribution requirement” – meaning that a charitable gift can reduce your taxes in 2006 if you haven’t yet received a distribution.
IRA gifts may not exceed $100,000 and may be made only in 2006 and 2007. The “ceilings” on contribution deductions (50% of adjusted gross income for cash, 30% of AGI for long-term capital gain property) do not apply to IRA gifts.
Transfers are not permitted to private foundations, donor advised funds or “supporting organizations.”
IRA gifts cannot be made to charitable remainder trusts or other “life income gift” arrangements.
Contributions to Endowment Funds, Pace Funds we hold for your favorite charities, or contributions directly to those Endowment Funds, are eligible under the new law, under the rules as indicated elsewhere on our website, when made directly by the Trustee.