IRA Rollover Provisions
The Emergency Economic Stabilization Act includes a provision extending the popular IRA charitable rollover until December 31, 2009. The 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. Please note that the Worker, Retiree, and Employer Recovery Act of 2008 suspends required minimum distributions for 2009; the IRA Rollover remains a favorable option for charitable giving.
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 70 1/2 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.
