ICC Educational Foundation
IRA Charitable Rollovers
The Emergency Economic Stabilization Act of 2008 extends for 2008 and 2009 an expired provision permitting IRA owners age 70½ and older to make IRA distributions to qualified organizations of up to $100,000 per year.
Without the new legislation extending the charitable rollover rules which expired in 2007, donors wishing to make a gift from their IRA would have been required to take a taxable distribution, write a check to the charity and then claim an income tax deduction on their tax return. This could have resulted in more social security income being taxable and a loss of itemized deductions due to percentage limitations. In addition, the charitable contribution deduction would possibly have been required to be spread over several years while the IRA distribution was included 100 percent in the first year – a mismatching of income and deductions. The new law was designed to solve these tax problems for donors. In addition, the "qualified charitable distributions" can take the place of required minimum distributions (which otherwise are 100% taxable).
To make a 2009 gift from an IRA, you should contact your IRA trustee or custodian as soon as possible – preferably before receiving any required minimum distributions. Transfers for 2009 must be completed by December 31, 2009. Distribution checks should be issued in the name of a qualified charity, not to the account owner, with notification to the charity.
This legislation offers a new window of opportunity for donors to utilize their IRAs and "make a difference" in the lives of others. If you need more information, please feel free to contact the ICC Educational Foundation at (309) 694-5530 or your financial advisor.
Questions & Answers
Q: I’m 62 years old; can I take advantage of the IRA transfer?
A: No, you must be 70 ½ or older to take advantage of the rollover.
Q: I have several retirement accounts, pensions and IRAs. Does it matter which retirement account I use?
A: Yes, gifts can only be made from an IRA.
Q: My spouse and I both have IRA's. Can we each gift up to $100,000?
A: Yes, it is per taxpayer.
Q: I have three different charities I support…can I give to all of them?
A: Yes, you can make multiple gifts as long as your cumulative giving doesn't exceed the $100,000 limit. Please check with your IRA custodian for any limits they may have.
Q: My required minimum distribution isn’t anywhere close to $100,000, can I still make a gift using this vehicle?
A: Absolutely. The IRS has not stated a minimum dollar amount to take advantage of this opportunity. Please check with your IRA custodian for any limits they may have.
Q: I don’t need my entire required minimum distribution, but I need some of it for living expenses. Can I take part of my distribution and give part of it to a charity?
A: Yes, by transferring part to a charity, you will still have a lower taxable income. Be sure, though, you do not take possession of the portion you wish to transfer to the charity. Let your IRA custodian know your intent and they will take care of it for you.
Q: Can I use the rollover to create a charitable remainder trust or charitable gift annuity?
A: No, the IRA rollovers for 2006 and 2007 do not include these options.
Q: Can I use this option to purchase a table at the charity’s fundraiser?
A: No, the transfer must meet the same qualifications as a charitable deduction.
Q: Does the ICC Educational Foundation qualify as a public charity to accept these IRA rollovers?
A: Yes, the Educational Foundation qualifies to can accept these gifts. It is not a private foundation and is described in Section 509(a)(1) and Section 170(b)(1)(A) of the Internal Revenue Code.
Q: Is there a time limit as to when I can take advantage of this?
A: Yes, just like your regular required minimum distribution it must be completed by December 31st of each year.
Q: What do I do now?
A:1. Contact your attorney or tax advisor to discuss further
2. Know the legal name, city and state of the charity (ours is listed below)
3. Contact your IRA custodian now to get the necessary forms - don’t wait until the end of the year.
4. Notify the charity about the IRA rollover
5. Make sure you receive a receipt from the charity acknowledging the IRA gift and show it was a "qualified charitable distribution".
Legal Name: Illinois Central College Educational Foundation
Address: College Drive, East Peoria, IL 61635
Fed Tax ID #: 37-1207827