IRA Donations
Congress Extends Direct IRA Donations Law
In 2006, Congress passed a law that permitted those over 70-½ years old to make charitable contributions directly from their IRAs. The contributions would NOT increase the donor’s taxable income, and would count toward the donor’s minimum required distributions. Although the law was initially intended to be a temporary stimulus to charitable giving in the wake of Hurricane Katrina, it has been extended and is still in effect for tax year 2008.
SLUH alumni and friends over 70-½ years old with traditional or Roth IRAs can make a gift to SLUH (or any charity) directly from their IRA. This essentially gives you the benefit of a charitable deduction WITHOUT increasing your taxable income. As an added benefit, your contribution counts as part of your minimum required distribution from the IRA and the donation is not subject to the usual percent of donor income limitations. The IRA distributions can come from multiple IRAs, but they are limited to an aggregate of $100,000 per donor.
Even donors who do not itemize their Federal income tax returns may make qualified IRA gifts and exclude such gifts from their reportable income. The following limitations apply to IRA contributions:
- Qualified charitable distributions may not exceed $100,000 in the aggregate in any taxable year.
- Qualified distributions must be made directly to the charity by the IRA trustee. Contact your IRA trustee for information on how to initiate a transfer.
- Qualified charitable distributions may be excluded from gross income for Federal Income tax purposes. Certain states may not exclude gift amounts withdrawn from an IRA for state income tax purposes.
- Contributions may be counted toward the Minimum Required Distribution (MRD) for a donor’s IRA accounts.
Who is most likely to benefit?
- Individuals who take mandatory minimum withdrawals, but don’t need additional income.
- Individuals who wish to give more than the deductibility ceiling (50% of AGI).
- Individuals who are subject to the 2% rule that reduces their itemized deductions.
- Individuals whose major assets reside in their IRAs and who wish to make a charitable gift during their lifetime.
- Individuals who intend to leave the balance of their IRA to charity at death anyway.
If you have questions, please contact Mr. Tom Auffenberg at SLUH at (314) 531-0330 x112. The financial institution that manages your IRA may also have helpful information.
