Excellent news for supporters of Hospice! Those over 70½ can make a gift by using a direct rollover from their Traditional or Roth IRA for a limited time.

The Pension Protection Act of 2006 allowed donors to make tax-free IRA donations to qualified 501(c)(3) charities. The original law expired on December 31, 2007 and was not extended—until now. On October 3, 2008, President Bush signed the Emergency Economic Stabilization Act of 2008 (H.R. 1424) which reinstated the previous tax law retroactive to January 1, 2008 and extends it through December 31, 2009.

This special tax law allows donors 70½ and older to donate up to $100,000 from their IRAs directly to a qualified 501(c)(3) charity with no tax consequences. Qualifying charitable IRA gifts are not reportable as income so they never create a tax for the donor. Also, a charitable IRA distribution counts towards a donor’s minimum required distribution (MRD) for the year.

An IRA charitable gift is most advantageous for donors that:

• Do not itemize their deductions or
• Lose itemized deductions based on gross income limitations or
• Pay an Alternative Minimum Tax (AMT) because of a reduced exemption or
• Are paying the maximum tax on social security benefits.

A donor can make an IRA charitable gift if they meet the following criteria:

• Donor must be at least 70 ½ on the date of the gift.
• Gift must come from a Traditional IRA or a ROTH IRA.
• Gift must be outright.
• Gift must be for a 501(c)(3) charity (Not a Private Foundation or Donor Advised Fund).
• Total of all IRA gifts must not exceed $100,000 during the year.

To qualify for the IRA charitable gift treatment, the donor must direct their IRA custodian to transfer funds in the name of the charity. Your IRA withdrawal must not be payable to you or it will count as income. Please instruct your IRA custodian to write a check from your IRA payable to Hospice of the East Bay.

For more information on IRA gifts, please call Hospice Foundation of the East Bay at (925) 887-5678.

This is for educational purposes only. Please check with your tax advisor in regard to your specific situation.

Most people agree that possible tax benefits were not the motivating factor in making a gift to charity. However, it is appropriate to briefly discuss different taxes and how they may be affected by a charitable gift. This information is intended to be general and individuals should consult with their own tax and estate experts to discuss their personal circumstances. It should also be understood this is not an exhaustive discussion and many significant tax aspects will not be discussed in this brief discussion.

Income Taxes: The Internal Revenue Services, by allowing those who itemize to take a charitable tax deduction, encourages donations to, and thus support of, charitable organizations. If you itemize deductions and make a gift of cash to a charitable organization, tax deductions may be taken for a gift to a public charity (up to 50% of Annual Gross Income -AGI) and to qualifying private foundations (up to 30% of AGI). Amounts exceeding these limits may be carried forward for up to five years.

There are other rules regarding other types of gifts, such as tangible property and gifts of appreciated assets. It is best to discuss these circumstances with a qualified tax advisor.

Estate Taxes: There are a variety of ways to make donations and reduce the burden of existing estate taxes. These may be done while you are still alive or through your will upon your death. Especially in light of the 2001 Estate Tax law changes, it is wise to consult with an estate planning attorney or qualified tax specialist.

For more free information about how a planned gift can help you, please give us a call.

Hospice Foundation of the East Bay
(925) 887-5678