Date: 01/01/2010

IRA gifting provision Expired - for now?!

The special IRA gifting legislation passed by Congress and extended through the 2009 tax year is now officially expired.  Congress has the option, however, to renew the legislation at any time as occurred in late 2008.  Congress has an extraordinarily full agenda in 2010, including many items that may have a profound impact on taxation and personal estate planning. Your friends here at the Foundation will continue to monitor legislative developments at the state and national levels and post helpful updates and information as it becomes available.   

The following description of the expired IRA gifting legislation is provided for general information purposes and as a possible guide should Congress renew the legislation again this year:

Effective for the 2008 and 2009 tax years only, The Tax Extenders and Alternative Minimum Tax Relief Act of 2008 allows direct gifts to a charity of up to $100,000 per year from individual retirement accounts (IRAs) without including the distribution in income.

Key Points:

• You must be at least age 70 ½ when the gift distribution is made.
• The new law applies only to IRA accounts (Traditional or Roth).  Other plans such as 401(k) or 403(b) do not qualify.
• The gift distribution(s) must be made directly from your IRA administrator to your church, UM organization, or other favorite charity.
• Total IRA gifts are limited to $100,000 per taxpayer per year.  If married and each spouse has an IRA, then each may gift up to $100,000 per year.
• The new law applies only to gifts made in 2008 and 2009.
• The gift counts toward your IRA minimum annual distribution requirement.  (Please note: Legislation was signed in December 2008 suspending the minimum distribution requirement in 2009.)
• The gift distribution is excluded from your income for both federal and Missouri state income tax purposes.  Although you cannot deduct the gift on your income tax return, the distribution is not reported as income so there is no adverse income tax effect.
• Under this law, IRA gift distributions may not be used to contribute to a private foundation, a supporting organization, a donor advised fund, charitable gift annuity, or charitable remainder trust.

Talk to your tax and financial advisors

This legislation is effective immediately, and you will want to discuss it with your professional tax and financial advisors.

• Contact your IRA custodian to direct transfers to any qualified public charity - and that includes your local United Methodist Church!  (Or, you might use such a gift to start an endowment in your name for the benefit of your local church.)
• To view or download a sample IRA Gift Distribution Request Letter, click here. 

 

Encourage Giving

If you would like to share this information with your congregation, we suggest mailing the following resources to all members age 30 and up.  Click on the links to view or download the material.

• Sample cover letter for direct mail.
• Informational flyer.  (You may order up to 100, free of charge, directly from the Foundation.  Larger quantities are available at a cost of $30 per 100 flyers.)
• Sample IRA Gift Distribution Request Letter. 

 

Don't Forget

Churches must provide a specific gift receipt to the donor for IRA gift distributions to ensure that the gift qualifies and the donor has the necessary record.

• Sample Gift Receipt Letter.