Tax-free Giving From Your IRA
New rules let you turn IRA distributions into tax-free donations
Through December 31, 2007, Individual Retirement Account owners age 70 ½ or older can make a tax-free donation directly to charitable organizations such as Environmental Defense Fund.
The "rollover" rule
Under the old rules, you were required to pay income tax on your IRA distributions—
Now you can "rollover" the amount of your distribution (up to $100,000) directly to the charity of your choice—
How to qualify
- You must be at least 70 ½ years of age on the date of the gift.
- You may gift up to $100,000 per person this year. (If two spouses have IRA plans, each may make gifts up to that limit.)
- Applies to traditional and Roth IRAs only.
- Gifts will be counted towards your required minimum distribution (RMD).
- Distributions will be excluded from gross income for income tax purposes. They cannot be claimed as deductions but will result in a greater benefit to you and your favorite charity.
- Gifts must go to a qualified public charity, such as Environmental Defense.
- Funds must be transferred directly from your IRS to the chosen charity. (You may not take the distribution, then donate the funds.)
Maximize the value of your contributions
The new rule offers IRA holders who would like to make a charitable donation a significant benefit. For example, in the past if you were in the 35 percent tax bracket and withdrew $100,000 from your IRA to give to Environmental Defense, you would have to claim $100,000 as ordinary income and pay $35,000 in income tax, leaving $65,000 to fund your charitable contribution.
Under this new legislation, you may roll over $100,000 directly from your IRA to Environmental Defense Fund with no additional tax implications. This charitable IRA rollover may also be used to meet all our part of the minimum yearly distribution requirements.
Contact us to learn more
For more information on this and other ways to maximize your charitable giving, please contact us by email or by phone at (877) 677-7397.
Posted: 11-Aug-2008; Updated: 11-Aug-2008
