IRA Charitable Rollover Gifts

The IRA Charitable Rollover expired on December 31, 2009 and could be extended in 2010. The U.S. House of Representatives passed the Tax Extenders Act of 2009 (H.R. 4213) on December 9, which would extend the IRA Charitable Rollover for 2010. If adopted by the Senate, it would be retroactive to January 1 of 2010. On December 10 the bill was received in the Senate, Read twice, and referred to the Committee on Finance.

Enacted in August 2006, the rollover was extended in October 2008 through 2009. Under the Emergency Economic Stabilization Act of 2008, donors age 70 ½ or older were able to contribute up to $100,000 annually from an IRA account and avoid federal tax consequences. When the amount withdrawn from the IRA account was paid directly to the charity, it was not counted as federally taxable income. In addition, the IRA charitable gift amount counted against the donor’s required minimum distribution (RMD). However, the gift may not be counted as a charitable deduction on federal tax returns. This provision was effective for all of 2008 and extended through 2009 as well.

To take advantage of the IRA transfer provision it was necessary to meet all of the following requirements:

• You are at least 70 1/2 years old at the time the gift is made.
• The gift is paid directly from the IRA account to the charity.
• The total transferred to all charities under this provision is no more than $100,000 in 2008 and 2009, and
• The gift is completed between January 1, 2008, and December 31, 2009, inclusive.

We have been told that some IRA account managers have refused to follow donors' requests under this law. Not all managers are familiar with this law and may fail to correctly follow your directions. You should therefore maintain close contact with your plan administrator throughout the process to avoid a distribution that is erroneously taxable.

You should always consult your own professional tax counsel on these matters, as with all legal and tax matters, since Tau Beta Pi cannot act as your advisor. There are several exciting opportunities for gifts provided by this new law; however, since we are prohibited from offering advice, this information should not be construed as tax or legal advice.