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IRA Charitable Rollover

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The IRA Charitable Rollover Returns for 2008 and 2009

The Emergency Economic Stabilization Act of 2008 contains several provisions related to charitable giving—including the extension of the IRA Charitable Rollover provision, which had expired at the end of 2007.

You have an encore of this special planning opportunity if you are age 70 ½ or older, own an IRA, and intend to make charitable gifts in 2008 or 2009.

If you meet these requirements, you can make distributions directly from your IRA to KCTS Television and other charities without the distributions being included in taxable income and subject to withholding. Funds transferred from your IRA to KCTS 9 count toward your mandatory withdrawal.

Without this gift provision, making a charitable contribution using IRA funds would have required withdrawing money from your IRA and then contributing it. The amount withdrawn would have been taxable, and the deduction for the contribution may or may not have offset the tax.

Example: Suppose Jack has $500,000 in an IRA and will be required to withdraw approximately $25,000 this year. If Jack wants to contribute $10,000 to KCTS, he can authorize the trustee of the IRA to transfer $10,000 to KCTS Television and $15,000 to himself. He will not be subject to tax on the $10,000 distributed to charity. (Jack does not deduct the $10,000 gift—by not paying tax on otherwise taxable income, he has already received his tax benefit.)

Making a contribution to KCTS Television from an IRA rather than other assets may be especially appropriate if you:

  • do not itemize deductions,
  • would not be able to deduct all of your charitable contributions because of deduction limitations,
  • may lose some of your itemized deductions because of your income level, or
  • are required to take distributions but do not need them for living expenses.

Certain limitations apply to these non-taxable charitable distributions from an IRA:

  • They cannot exceed $100,000 per person per year.
  • They must be made to a public charity (not a private foundation), and they cannot be to a supporting organization or a donor-advised fund.
  • The gifts must be outright. For instance, they cannot be used to establish a gift annuity or fund a charitable remainder trust.
  • No goods or services, such as tickets to an event, can be received in exchange for the contribution.
  • These tax-free distributions can be made only in 2008 and 2009.

If you would like more information or sample letters of transmission for IRA rollover gifts, please contact Sara Elward at 206.443.6730 or selward@KCTS9.org.