You are probably already aware that the House recently approved and President Bush signed a historic $700 billion bailout or rescue plan. The legislation implementing the pl0.0..an contains important provisions relating to charitable giving.
The Emergency Economic Stabilization Act of 2008, the main feature of which is the bailout package, also extends certain portions of the Pension Protection Act of 2006 that expired on 12/31/2007. The centerpiece of the legislation from a gift planning perspective is the IRA Rollover.
This law provides that, in each of the years 2008 and 2009, an owner of a traditional or Roth IRA may instruct the trustee to distribute directly to a public charity up to $100,000 without the distribution being included in taxable income, and that distribution will count toward the IRA owner's mandatory withdrawal amount.
To qualify for IRA rollover treatment:
- The donor must direct the IRA manager to transfer funds directly to a charity. A withdrawal followed by a contribution will still have to be reported as income.
- The donor must be at least age 70½ and the donee must be a tax-exempt organization to which deductible contributions can be made. Donor-advised funds and supporting organizations are not eligible.
This law does not include the terms of proposed legislation such as the Public Good IRA Rollover Act. Therefore, the gift must be outright; rollovers to a planned gift, such as a gift annuity or a charitable remainder trust, do not qualify. Similarly, outright distributions to a charity from employer-sponsored retirement plans, such as Simple IRAs, 401(k)s, and 403(b)s, do not qualify. Also note that IRA rollovers may be includable in a donor's income for state and local tax purposes and may not earn an offsetting charitable deduction, depending on state and local law.
Find more detailed information on this legislation by visiting one of the two following websites: http://www.pgcalc.com/pdf/EESA2008.pdf or http://www.ncpg.org.
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