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IRA Charitable Rollover Provision Extended Through 2009

In 2007 we reminded Vote Smart contributors of the special window of opportunity created by the 2006 Pension Protection Act, which allowed qualified donors to donate up to $100,000 tax free from their IRAs to charitable institutions before December 31, 2007, when the act expired. It benefited both donors and Project Vote Smart, allowing us to raise more than $60,000 we may not have received otherwise.

The Great News? The recent Bailout Bill included a provision extending that tax break until December 31, 2009. This means that if you qualify, you may get a significant tax break by donating from your IRA directly to Project Vote Smart before December 31, 2008, and then again in 2009 if you want.

This provision applies only to taxpayers who are at least 70½ years old and therefore required to make minimum distribution from their IRAs. It allows these qualified taxpayers to donate up to $100,000 from their Individual Retirement Accounts tax free in 2008 and again in 2009 to charitable organizations. Key provisions of the legislation include:

• Donations must be in cash and must be made directly from your IRA by your IRA custodian-administrator to the charity. The check must be payable to the charity and mailed to the charity. The donor may not be a middle-agent in this transaction. There is no limit as to the number of charities to which you may give, but the aggregate of all such giving by any one taxpayer may not exceed $100,000 in any one year to be tax free.
• The donor suffers NO federal tax consequences in a Charitable IRA Rollover. A Rollover is 100% tax free, whereas a normal IRA distribution goes into your taxable account and is 100% taxable as ordinary income, as part of your adjusted gross income.
• As a 501(c)(3) Project Vote Smart qualifies for receiving Charitable IRA Rollovers.

The bottom line is that taking advantage of this Charitable IRA Rollover in 2008 to make an extra donation to Project Vote Smart will likely benefit both you and the Project.

Contact us at aelm@votesmart.org, or (406) 859-8683 for more information or help. We urge you to consult with your financial advisor, as well.

Letter to Charitable Institution
Letter to Financial Institution