| Deadline Looming: Use your IRA to Make a Gift to the Center before December 31
There is still time to take advantage of the special income tax provision contained in the Emergency Economic Stabilization Act of 2008 that allows you to use your IRA to make charitable contributions (of any amount up to $100,000) with no tax consequence to you. You must be 70 and ½ years old and the gift must be a direct distribution from your IRA to the approved charity. This provision only applies to IRAs and not to other types of retirement accounts, and the provision will expire on December 31, 2009. For more information on how to use this provision to make a gift to the Center, please contact: Margaret Costley at 919-843-0345 or Margaret.Costley@unc.edu.
On October 3, 2008, President Bush signed into law the Emergency Economic Stabilization Act of 2008. While the main feature of the Act is the bailout package, it also extends certain portions of the Pension Protection Act of 2006 that expired on December 31, 2007. The centerpiece of the legislation from a gift planning perspective is the IRA Rollover provision. This provision allows individuals to make distributions from their IRA accounts directly to a charity without recognizing the distribution as income. The extension covers distributions made in tax years 2008 and 2009. Key points of the provision are:
- You must be at least 70½ at the time of the charitable distribution.
- You may distribute up to $100,000 per year, for tax years 2008 and 2009.
- Distributions must be made directly from the trustee/administrator of your IRA to a qualifying public charity (you cannot receive the distribution prior to gifting to the charity).
- Distributions cannot be made to donor advised funds or "supporting organizations."
- Gifts must be made outright to the charity (they cannot be used to fund charitable remainder trusts or charitable gift annuities).
- No charitable deduction is allowed, since this provision allows you to exclude the distribution from income.
- Individuals who have accumulated IRA assets that may not be needed to support their retirement lifestyle, but are required to take distributions each year. A qualified charitable distribution can partially or completely satisfy annual minimum distribution requirements, without having to recognize the distribution as income.
- Individuals who have made, or are contemplating making, charitable gifts that exceed 50% of their adjusted gross income (the maximum amount of deduction allowed for cash gifts). A qualified charitable distribution is not subject to the 50% AGI (Adjusted Gross Income) limitation because no charitable deduction is permitted.
- Individuals who own an assortment of smaller IRA accounts that while not substantial in relation to financial needs, nevertheless require owners to keep up with minimum distribution requirements each year. These smaller accounts can be given in their entirety (provided the total amount for all accounts does not exceed $100,000) as a qualified charitable distribution.
- Individuals who do not itemize deductions on their federal income tax returns. Many prefer claiming the standard deduction and filing a less complicated return. Making a qualified charitable distribution will not require individuals to itemize, so there will be no need to change their tax preparation preferences.
Retirement plan accounts are one of the most highly taxed assets that a person can give to their heirs at death –sometimes taxed as much as 70 percent. Consequently, these accounts are one of the most inefficient assets to pass to family and loved ones, but they are one of the most tax-efficient assets to give to the Carolina Center for Jewish Studies to fund your Carolina legacy. Not only could you benefit from making an outright distribution now from your IRA, by naming the Carolina Center for Jewish Studies as the beneficiary of your retirement account, you could avoid excessive taxation of this asset. And since changing the beneficiary of your account is normally quite simple, any new laws related to estate and IRA taxation that would create the need to make further changes related to beneficiary designations should not be difficult to implement.
We urge you to consult your professional advisors regarding this charitable IRA rollover opportunity. To help insure that your gift meets all requirements as a qualified charitable distribution, please contact Margaret Costley at 919-843-0345 or Margaret.Costley@unc.edu.
Margaret can also assist you with any questions regarding making the Carolina Center for Jewish Studies a beneficiary of your retirement plan.
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