Congress Extends Tax-Free Charitable IRA Transfers
Just-Passed Economic Stabilization Act Contains Bonus for Year-End Givers
(October 6, 2008) While the country watched with trepidation last week as Congress hammered out the history-making, $700 billion Emergency Economic Stabilization Act, little-known was the fact that a provision in the signed legislation extends for two years Americans’ ability to make tax-free donations to charity from their retirement savings.
The so-called IRA Charitable Rollover, originally passed in 2006 and which had expired on December 31, 2007, permits donors age 70 ½ or older who own traditional or Roth IRA retirement savings accounts to make gift transfers from such an account to qualified non-profit charities – without first counting it as income and paying income tax. The provision is retroactive for calendar year 2008 and extends through December 31, 2009.
“Those who are often hit hardest during difficult economic times like those we are experiencing today are the important nonprofit programs and organizations that rely on the generosity of average Americans,” said Jim Williamson, president of the Community Foundation of Greater New Britain. “This important provision gives charitable organizations hope that, with the tax-savings to be had, those who are inclined to give will remain compelled to do so.”
Among the provisions of the IRA Charitable Rollover:
• Traditional and Roth IRAs are eligible. 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 If IRA owners withdraw funds and then contribute them to charity separately, amounts withdrawn will be included in the donor’s gross income.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 the donors’ incomes. IRA gifts may satisfy charitable pledges, according to the IRS.
• IRA gifts may not exceed $100,000 and must be made before 2010. Up to $100,000 may be distributed for both 2008 and 2009. The “ceilings” on contribution deductions (50 percent of adjusted gross income for cash, 30 percent of AGI for capital gain assets), do not apply to IRA gifts.
• IRA gifts cannot be made to charitable remainder trusts or other “life income gift” arrangements. Transfers are not permitted to donor advised funds or “supporting organizations.”
The Community Foundation, said Williamson, is available to answer questions any potential donor may have about the law. Those interested in learning more may call Ann Bova at (860) 229-6018, ext. 302, or Joe Baker at (860) 229-6018, ext. 314.
Established in 1941, the Community Foundation of Greater New Britain connects donors who care with causes that matter in Berlin, New Britain, Plainville and Southington. The Foundation manages more than 140 funds with a market value of more than $30 million, and distributes upwards of $1 million annually in community grants. For more information on the Foundation, please call (860) 229-6018 or visit the Foundation at www.cfgnb.org.
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