Charitable IRA Rollover

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A New Opportunity for Giving: The Charitable IRA Rollover

When planning your charitable gifts, there’s a new option that can pay big dividends at tax time.  Under the Emergency Economic Stabilization Act of 2008, for a limited time individual retirement account owners who have attained age 70½ can make tax-free charitable gifts directly from their plans!

Prior law, which still applies to those who don’t qualify under the new rules, dictates that individuals who make withdrawals from their IRAs and donate them to charitable organizations must include the taxable portion of the withdrawal in their gross income.  They could then claim a charitable deduction for the amount of their gift.  Although this sounds relatively simple, it can add complexity and, in some cases, create additional taxes.

The new law removes these obstacles and streamlines the process by allowing qualifying IRA owners to exclude “qualified charitable distributions” from their gross income.  Excluding this income also eliminates the need to claim an offsetting charitable deduction.  Therefore, the new plan will be particularly attractive to donors who wouldn’t otherwise itemize their tax deductions.

Frequently Asked Questions

What is a qualified charitable distribution (QCD)?

A QCD is any distribution from a traditional IRA made directly by the IRA administrator to a public charity described in the Internal Revenue Code that would have been taxable if distributed to the account owner. Unfortunately, QCDs do not include gifts to donor advised funds or supporting organizations.

Who can make qualified charitable distributions?

IRA owners who are at least age 70-1/2 on the date of distribution may make gifts this way.

Is there a time limit?

This provision is in effect for 2008 and 2009.  Transfers for the 2008 tax year must be completed by December 31, 2019.  Unless extended by Congress, your 2009 tax year IRA rollover gifts must be delivered no later than December 31, 2019.

Is there a dollar limit?

Yes.  You can exclude up to $100,000 per year in 2008 and 2009.

Can charitable distributions be applied to my minimum required distribution (MRD) requirements for the year?

In many cases, yes.  If, for example, you are required to withdraw 5 percent from your IRA for the year, you can direct the entire amount to the American Red Cross in satisfaction of your minimum required distribution.

How do I request a charitable distribution from my IRA?

Once you have determined the amount of your gift, contact your IRA plan administrator and request the distribution be made payable directly to the American Red Cross Bay Area Chapter.

How do I get started?

A great place to start is to give us a call and let us know you are interested in making a gift from your IRA.  We can provide you with a form to use when you contact your IRA plan administrator.  For more information, please contact Gary Ogburn at OgburnG@usa.redcross.org, (415) 427-8171, or Bill Ruettinger at RuettingerW@usa.redcross.org, (415) 427-8989.

Before making a gift to the American Red Cross Bay Area Chapter of a retirement plan asset, we recommend that you consult your tax advisor or attorney for full advice on the effect of your gift.

ęCopyright 2007, American Red Cross Bay Area Chapter. All Rights Reserved.
85 Second Street, 8th Floor, San Francisco, CA  94105 : (415) 427-8000
Photos: Gene Dailey, Elena Fava Emerson, Bonnie Gillespie.