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We are happy to announce that, on October 3, 2008, the President signed into effect The Emergency Econonomic Stabilization Act of 2008. While the primary purpose of the Act was to authorize the government to purchase problematic mortgage-backed securities, the Act also contains incentives for charitable giving. Foremost among these is the extension of the "Charitable IRA Rollover," a provision of the 2006 Pension Protection Act, which expired at the end of 2007, but has now been renewed for 2008 and 2009. This extension again creates wonderful opportunities and benefits for our supporters, such as you, and potentially for The Catholic University of America.
To assist you in your planning, we reiterate below the primary elements and benefits of Charitable IRA Rollovers:
The Charitable Rollover refers to a direct payment from your Individual Retirement Account (IRA) to a qualified charity, such as CUA, and involves donations that would otherwise be 100% deductible.
Individuals age 70 1/2 or better may exercise the Charitable Rollover up to $100,000.00 per year, for tax years 2008 and 2009, retroactive to January 1, 2008.
Required Minimum Distributions, called for by previously established IRS regulations, are typically a taxable event for the IRA holder. These minimums can be satisfied in the year of the gift, without triggering income taxes, by way of the Charitable Rollover.
Deductions on charitable gifts are typically subject to limitations based upon the Donor's Adjusted Gross Income (AGI). Charitable Rollovers will not count toward other AGI limits on charitable gifts, and therefore may be made in addition to any other charitable giving you may have contemplated.
For federal tax purposes, Charitable Rollovers will not be included in income, nor will they generate a deduction. Accordingly, these distributions will have a net zero effect on federal taxes. Tax treatment at the state level can vary depending on the donor's residence.
Because they are not normally 100% deductible, charitable remainder trusts and charitable gift annuities cannot be used to facilitate the Charitable Rollover. Nor can donor advised funds, or other donor controlled conduits. The example below may assit you in understanding the limitations and benefits, and in evaluating your own possibilities in light of this renewed opportunity:
Seventy-three year old Hilary Homily is, like many CUA alums, shrewd, successful, and generous. She has $1 million in her IRA with Cardinal Brokerage. Her adjusted gross income (AGI) is $200,000.00, half of which comes from required IRA distributions. Under the new provisions, Hilary can make a qualified Charitable Rollover from her IRA to CUA in the amount of $100,000.00. She will not receive a deduction for this donation. However, through this distribution, she will satisfy her required minimum distribution for the year, while reducing her adjusted gross income to $100,000.00, and avoiding the federal income tax generated by a standard IRA distribution. In addition, Hilary could still make additional charitable gifts from sources other than her IRA, and receive tax deductions on those of up to $50,000.00 (50% of her $100,000.00 AGI) for cash gifts or $30,000.00 (30% of her $100,000.00 AGI) for gifts of appreciated securities or property.
Tax consequences at the state level can vary and, as with any planned gift, we recommend that you consult your tax advisor before proceeding. |
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