Q&A: 2009 Charitable IRA Legislation for Donors Aged 70½+
The opportunity to make a tax-free gift from your IRA to Rensselaer is only available through Dec. 31, 2009, so please take a moment to review the questions and answers below to see whether this easy way to make a difference is right for you.
Q. I've already named your organization as the beneficiary of my IRA. What are the benefits if I make a gift now instead of from my estate?
A. By making a gift this year of up to $100,000 from your IRA, you can see your philanthropic dollars at work. You are jump-starting the legacy you would like to leave and giving yourself the joy of watching your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have already made by transferring that amount from your IRA under this legislation as long as it is $100,000 or less for the year.
Q. I'm turning age 70½ in a few months. Can I make this gift now?
A. No. The legislation requires you to reach age 70½ by the date you make the gift.
Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes. Under the legislation, gifts can be made from IRAs. Pension, profit sharing, 401(k), 403(b) and other forms of retirement funds do not fall under this tax legislation.
Q. I've heard that under different legislation I don't need to take a required minimum distribution from my IRA in 2009. Can I still use those funds as a gift under the law?
A. Yes, absolutely. The extended law allowing charitable IRA gifts allows you to make a gift from your IRA regardless of whether a minimum distribution was required. Contact your IRA custodian to transfer the desired amount up to $100,000. Your gift is not considered taxable income to you, nor will the amount be tax deductible.
Q. Do I need to give my entire IRA to be eligible for the tax break?
A. No. You can give any amount under this provision, as long as it is $100,000 or less this year. If your IRA is valued at more than $100,000, you can transfer a portion of it to fund a charitable gift.
Q. I have two charities I want to support. Can I give $100,000 from my IRA to each?
A. No. Under the law, you can give a maximum of $100,000 per year. For example, you can give each organization $50,000 this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.
Q. I'd like to give more than $100,000. How can I do that?
A. If your spouse is 70½ or older and has an IRA, he or she can also give up to $100,000 from his or her IRA.
Be sure to contact tax professionals and your IRA administrator if you are considering a gift under this law. Click here to download a PDF of a sample request from a plan owner to an administrator for a charitable distribution from an individual retirement account. Feel free to call Arthur T. Tracy at 518-276-2561 or tracya@rpi.edu with any questions.
Copyright © The Stelter Company, All rights reserved.
The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to income tax apply to federal taxes only. Federal estate tax, state income/estate taxes or state law may impact your results.
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