Extension of Charitable IRA Rollover Provision for Those Over 70.5 Years of Age
November 18, 2008
The Opportunity
If you are 70.5 years of age or older, you may make contributions from your IRA accounts directly to a charitable organization, like the University of Utah, without having to recognize the distribution as income in tax years 2008 and 2009.
Retirement plan accounts are one of the least tax-wise assets to pass to family and loved ones at death (they can be taxed as much as 70 percent), but one of the most tax-wise assets you can give to the University of Utah. By making an outright distribution from your IRA and naming the University of Utah as the beneficiary of your retirement account, you might be able to make a bigger gift than you ever thought possible during your life while avoiding taxation on this asset.
The Details
If you are 70.5 years of age or older:
- You may distribute up to $100,000 (per year) for tax years 2008 and 2009
- Your distribution must be made directly from the trustee or administrator of your IRA to a qualifying charitable organization (like the University of Utah). You cannot receive the distribution prior to gifting it to the charitable organization.
- Your distribution cannot be made to donor advised funds or “supporting organizations.”
- Your gift must be made outright to the charitable organization. In other words, they cannot be used to fund charitable remainder trusts or charitable remainder annuities.
- You may not take a charitable deduction for the distribution since you are allowed to exclude the distribution from income.
How Might You Benefit?
If you are 70.5 years of age and:
- Have accumulated IRA assets that are not needed to support your retirement lifestyle: A qualified charitable contribution can partially or completely satisfy your required annual minimum distribution while not having to be recognized as income.
- Have made, or are considering making, charitable gifts that exceed 50% of your adjusted gross income, which is the maximum amount of deduction you can claim for cash gifts. A qualified charitable distribution is not subject to the 50% adjusted gross income limitation because no charitable deduction is allowed.
- Have assorted smaller IRA accounts that are not substantial to your financial needs but require you to make minimum annual distributions. These smaller accounts can be given in their entirety (as long as the total does not exceed the $100,000 annual limit) to a charitable organization like the U.
- Do not itemize deductions on your federal income tax return. If you make a qualified charitable distribution, you don’t have to change your preferred filing preference since no deduction can be taken for the charitable distribution.
Additional Background
President Bush signed into law the Emergency Economic Stabilization Act of 2008 on October 3, 2008. The main focus of the Act is the bailout package, but it also extends certain portions of the Pension Protection Act of 2006, which expired on December 31, 2007. Included in the Emergency Economic Stabilization Act of 2008 is a provision that allows individuals aged 70.5 years or older to make distributions from their IRA accounts directly to a charitable organization without recognizing the distribution as income. The extension covers the 2008 and 2009 tax years; individuals must be aged 70.5 or older at the time of the charitable distribution.
Contact Us
Please consult your professional advisors about this gift opportunity. Also, we urge you to contact us so we can help ensure your gift meets all requirements as a qualified charitable distribution. We can also assist you with any questions you have about making the University of Utah a beneficiary of your retirement plan.
Karin Hardy
Director of Planned Giving
Development Office
University of Utah
540 Arapeen Drive, Suite 250
Salt Lake City, UT 84108
Telephone: (801) 585-6220
Toll-free: (800) 716-0377
Email: karin.hardy@admin.utah.edu