IRA Charitable Rollover Extended for 2008 and 2009
Posted on Mon, 29 Dec 2008 12:46:23 by Kristian Hurley
While it may seem that the $700 billion bailout of Wall Street may not have produced tangible results, there was something within the legislation that is good news for non-profits like AARDA! The IRA charitable rollover provision of the Pension Protection Act of 2006 has been extended to cover 2008 and 2009. What does this mean to you as an AARDA supporter? It means that for those of you who have not lost everything in the stock market and would like to utilize your gains to assist AARDA in the eradication of autoimmune diseases may do so WITHOUT suffering a tax penalty.
Here’s how it works:
In each of the years 2008 and 2009 those of you who are 70 ˝ years or older and are the owner of a traditional or Roth IRA may “rollover” to AARDA or other charities up to $100,000 without the distribution being included as taxable income, allowing the distribution to count toward the annual mandatory withdrawal amount.
Nuts and Bolts:
Based on the original provisions of the Pension Protection Act of 2006:
1. The donor (IRA owner) must be at least 70 ˝ years young at the time a transfer (rollover) is made from the IRA to charity.
2. The transfer must be made from the IRA directly to a qualified charity.
3. The combined value of all transfers made (whether to one or more charities) cannot exceed $100,000 per taxpayer per taxable year.
4. Transfers may be made in each of the years 2008 and 2009.
5. A qualified charity is an organization described in section 170(b)(1)(A), other than an organization described in section 509(a)(3).
6. Transfers are not included in your adjusted gross income for federal income tax purposes.
7. Transfers to charity may count as part of your annual mandatory IRA withdrawal amount.
8. IRA transfers to charity are not taken into account in determining the deduction eligibility of other charitable contributions.
Want to make a transfer to AARDA before year-end 2008?
IRA charitable rollovers must be requested directly from owners IRA administrator. The process is not standardized so you may want to contact them directly for their process. Most will want a letter from you indicating your request. Here is a sample letter to send to your IRA administrator. You’ll also need to notify AARDA that the request has been made so that we can follow up with your IRA administrator. A sample letter informing AARDA of your actions is also below.
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RE: Request for Charitable Distribution from Individual Retirement Account
Dear Sir or Madam:
Please accept this letter as my request to make a direct charitable distribution from my Individual Retirement Account # (Account Number) as provided by the Sec. 1201 of the Pension Protection Act of 2006 and Sec. 408(d)(8) of the Internal Revenue Code of 1986, as amended and as extended under the Emergency Economic Stabilization Act of 2008. The American Autoimmune Related Diseases Association (AARDA) tax identification number is 38-3027574.
Please issue a check in the amount of $___________ payable to the organization at address below:
American Autoimmune Related Diseases Association (AARDA)
22100 Gratiot Avenue
East Detroit, MI 48021
Attn: Virginia Ladd, President and Executive Director
In your transmittal to the charity, please memorialize my name and address as the donor of record in connection with this transfer. Please copy me on your transmittal.
(Optional paragraph for requests occurring close to year-end) It is my intention to have this transfer qualify for exclusion during the (2006 or 2007) tax year. Therefore, it is imperative this distribution be postmarked no later than December 31, 2008.
If you have any questions or need to contact me, I can be reached at (telephone).
Thank you for your assistance in this matter.
Sincerely,
(Plan Owner)
Sample Letter from Donor Informing Charity of Forthcoming Qualified Charitable Distribution from Administrator
Dear Sir or Madam:
It is my pleasure to inform you that I have requested a qualified charitable distribution from my Individual Retirement Account payable to your organization in the amount of $____________ from my plan trustee/administrator, ( name of trustee/administrator).
It is my intent to comply with the requirements of Sec. 1201 of the Pension Protection Act of 2006 and Sec. 408(d)(8) of the Internal Revenue Code of 1986, as amended and as extended under the Emergency Economic Stabilization Act of 2008., in connection with this gift.
Accordingly, upon your receipt of payment from my trustee/administrator, please send me a contemporaneous written acknowledgement that states the amount of my gift, that no goods or services were transferred to me by your organization in consideration for this gift, and that my gift will not be placed in a donor advised fund or supporting organization.
If you have any questions or need to contact me, I can be reached at (telephone).
Sincerely,
(Donor)
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