Charitable IRA Distribution Opportunity Expires on December 31, 2009.

 

As you may know, Congress has revived the Charitable IRA Rollover legislation that was first created in the Pension Protection Act of 2006 as part of the Emergency Economic Stabilization Act of 2008. This legislation allows tax-free lifetime distributions from an IRA directly to a charity.  

Between now and December 31, 2009, you have a unique opportunity to help the College and other charities that benefit from your philanthropy. Here's how:

• You must be age 70 ½ or older as of the date of distribution.
• You may transfer up to $100,000 in 2009 - there however is no minimum.
• Distributions must be made directly from a traditional or Roth IRA to a qualified charity and must be for outright gifts; trusts and other planned gifts do not qualify.
• Distributions will be excluded from federal taxable income.  Depending on where you live, you may avoid state income tax on the distributions as well.  Note that you will NOT receive an income tax deduction for your distribution; the amount is simply eliminated from your income tax calculations.
• Distributions will count toward your minimum required distribution.
  • NOTE - The required minimum required distribution (MRD) for 2009 has been waived. You are NOT required to take a distribution from your IRA this year.

Distributions from qualified plans such as those established under sections 401(k) or 403(b) of the Internal Revenue Code will not qualify for this special treatment.  If you are interested in this opportunity, you will first need to transfer your desired distribution amount from your qualified plan to a traditional IRA.

Cautions

There are several restrictions and issues to keep in mind:

• The transfer must be made from your IRA directly to charity, otherwise you must declare the distribution as income
• The plan must be a traditional IRA or a Roth IRA; it cannot be an employer sponsored plan such as a SIMPLE IRA, a 401(k) or 403(b) plan or a simplified employment pension (“SEP”) plan
• Distributions from Roth IRAs are not taxed to the account owner, so it is still wise to determine if some asset other than the Roth IRA is best to give to charity
• Transfers are not deductible as charitable gifts
• You may receive no benefit from the charity for your transfer (e.g. tickets, dinners, etc.)
• Transfers cannot be made to charitable gift annuities, charitable remainder trusts or pooled life income funds

Please feel free in using the attached Model Letter of Instructions to initiate an IRA tranfer with our account management. 

You may also wish to review the related Case Study as an example.

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Please call The College of New Jersey Gift Planning Office at 609-771-3285, or e-mail jspencer@tcnj.edu for more information.