Charitable IRA Rollover Information
Individuals over the age of 70 ½ can make annual tax-free deductions in 2008 and 2009 of up to $100,000 from their IRAs directly to their congregation, the Unitarian Universalist Association (UUA), or other Unitarian Universalist (UU) entity. This is a limited time opportunity.Previously, individuals would have had to report any amount taken from an IRA as taxable income before taking a charitable deduction for the gift. The charitable gift deduction is limited to 50 percent of your adjusted gross income, which caused some donors to pay more in income taxes than if they didn’t make a gift at all.
Fortunately, IRA gifts now can be accomplished simply and without tax complications. Plus, you can make the gift now—while you are living and able to witness the benefits of your generosity.
You may contribute from your IRA if:
- You are age 70½ or older
- The gift is $100,000 or less each year
- You make the gift on or before Dec. 31, 2009
- You transfer funds directly from an IRA or Rollover IRA
- You transfer the gift outright to the UUA, your congregation or other UU entities of your choosing.
How the Rollover Works
Pat, aged 80, has $450,000 in an IRA and wants to give $75,000 this year. If Pat transfers $75,000 from the IRA, she will avoid paying income tax on that amount. She cannot, however, claim a charitable deduction—it is a pure “wash.” Pat has found an easy way to benefit charity without tax complications.
How to Make a Donation
- Send a letter to your IRA custodian requesting a rollover directly from your IRA directly to the organization of your choice. Download a template in PDF or Word versions.
- Notify the organization of your intentions.
Please plan ahead! It can up to 2-3 weeks for the transfer to take place.
Questions and Answers
Q. I have several retirement accounts, does it matter which retirement account I use?
A. Yes. Gifts can be made from an IRA or Rollover IRA. Pension, profit sharing and other forms of retirement funds do not fall under the new legislation.
Q. Can I use this opportunity to establish a life income gift such as a charitable gift annuity?
A. No. The gift made from your IRA must be treated as an outright gift to qualify.
Q. Does the gift count towards my minimum required distribution?
A. Yes. Donations made directly from your IRA count towards your minimum required distribution. This is an especially effective way of giving for people who find that they do not need all of the income from their minimum required distribution in 2008 or 2009.
For More Information
Please feel free to contact the UUA’s Office of Legacy Gifts at 888-359-7558 or giftplans @ uua.org for more information about direct contributions of qualified IRA assets or about other planned gifts. As with any substantial gift, we recommend that you consult your tax professionals.
Printable version of the above information. (PDF, 2 pages)
Last updated on Thursday, October 9, 2008.
