Direct Gifts From an IRA: Mutually Beneficial Giving

Please note: The information below was valid for 2009 but has not yet been updated for the current year. As of March 3, 2010, Congress has not yet extended the charitable IRA legislation.

There's good news for individuals aged 70½ or older with individual retirement accounts. Thanks to the extended charitable IRA legislation, you can make outright gifts using IRA funds without tax complications.

If you are required to receive minimum distributions from your IRA and you do not need the money for personal use, consider using those funds as a charitable gift. While you cannot claim a charitable deduction for the IRA gifts, you will not pay income tax on the amount. You also will not need paperwork to prove a gift.

You may contribute funds this way if:

  • You are 70½ or older
  • Your IRA gifts total $100,000 or less each year in 2008 and 2009
  • You transfer funds directly from an IRA
  • You transfer the gifts outright to one or more public charities (This excludes gifts made to charitable trusts, donor advised funds and supporting organizations.)

The benefits:

  • In most cases, the transfer counts toward your minimum required distributions.
  • The gift generates neither taxable income nor a tax deduction, so even those who do not itemize their tax returns receive the benefit.
  • You may transfer up to $100,000 directly from your IRA in 2008 and 2009.
  • The distributions may be in addition to or fulfill any charitable giving you have already planned.

The next step:

Be sure to contact tax professionals and your IRA administrator if you are considering a gift under this law. Feel free to call Grace Ellens at 320-363-2551 with any questions.