December 11, 2008 — The holiday season is a wonderful time to be generous with others through charitable gifts. Here are three ways to make you a very merry giver: Direct contributions using a credit card. (Donations made by Dec. 31 qualify as current-year deductions.); take advantage of your employer’s charitable gift matching program if available; and if you are aged 70 1/2 or older, you can transfer both 2008 and 2009 distributions from your IRA to qualified charitable organizations, thus eliminating income tax on withdrawals!
The charitable IRA legislation contained in the Emergency Economic Stabilization Act of 2008 is once again in effect, enabling people aged 70 1/2 or older to transfer distributions from their IRAs to qualified charitable organizations such as EAA. This applies to transfers made in 2008 and 2009, eliminating income tax on the withdrawal. While gifts are commonly for several thousand dollars, there is an upper limit of $100,000 per year per IRA account.
If you or a relative meet the age requirement, consider using those funds as a charitable gift. This is an excellent way to satisfy the requirement for minimum distributions from your IRA while benefiting a cause or an organization that you are passionate about. There will be no income tax to be paid on the gift, although no charitable deduction can be claimed.
While the legislation does not allow this type gift to be made directly from 401(k) or 403(b) accounts, it is generally quite easy to roll over these funds into an IRA account and then proceed with your charitable IRA gift. And, you can simplify the gifting process by arranging for check-writing privileges on your IRA account.
Be sure to contact your professional financial advisor and/or your account administrator for specific guidance, particularly if you are considering a gift under the renewed IRA legislation. To learn how charitable gift planning can help you reach your goals, secure your family’s future and provide social impact through your favorite charitable organization, further information is available on the EAA website. Questions? Please contact EAA’s Planned Giving Manger, Eric Von, at 920-426-6887 or evon@eaa.org.