The government recently renewed a special provision permitting penalty-free charitable gifts from IRAs. Your IRA operates without the burden of taxes and this unique law temporarily allows you to leverage the growth of your IRA for the benefit of charities without any taxation.

• The person making the contribution must be at least 70 ½ years of age at the time the direct charitable distribution is completed.
• IRAs are the only type of retirement account eligible to initiate tax-free direct contributions.
• The maximum allowable transfer each year in 2008 and 2009 is $100,000. The amount transferred directly to charity will not be includible your gross income.
• A contribution from your IRA directly to a qualified charity will be credited toward your annual required minimum distribution (RMD).
• To make a gift, simply contact the company administering your IRA and request their internal form that will authorize a charitable distribution from your IRA. If requested by your IRA administrator, Whitman’s tax identification number is 91-0567740.
• An IRA rollover gift is direct and does not pass through your tax base. As a result, you are not able to claim an additional charitable deduction.

A key benefit of the direct transfer is that no income is recognized from your IRA as a result of the transfer, meaning you not only owe no tax on the withdrawal, but the gift will have no impact on your adjusted gross income nor the alternative minimum tax. As an added bonus, the direct transfer will count as a required minimum distribution (RMD) from your IRA.

If you do not itemize your taxes, an IRA gift could be especially advantageous. Normal charitable gifts typically provide non-itemizers with a charitable income tax deduction that likely cannot help reduce their tax bill. The IRA rollover gift allows you to make a charitable gift and prevent recognition of income that would be otherwise taxable. This strategy could provide you with an effective method to continue your support of Whitman and reduce your tax bill at the same time.