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IRA QUALIFIED CHARITABLE DISTRIBUTION EXPIRES DECEMBER 31, 2009
November 16, 2009
IRA QUALIFIED CHARITABLE DISTRIBUTION EXPIRES DECEMBER 31, 2009
In 2006 Congress passed the Pension Protection Act. One of its features was a provision which allowed persons over age 70½ to use their IRA to make a charitable contribution. This provision was set to lapse at the end of 2008; but was extended through the end of 2009. This means time is short to take advantage of this unique planning opportunity. If you do not itemize deductions on your Federal income tax return, and typically make charitable contributions to one or more charities, you may want to consider this option.
Several conditions and limitations* apply:
- Each eligible taxpayer may exclude up to $100,000 for Qualified Charitable Distributions [QCD.]
- The owner of the IRA cannot receive a distribution and then send the contribution to charity. The financial institution managing the IRA must issue a check payable directly to the charity in order for it to qualify as a QCD. However the check may be sent to the IRA holder for mailing or delivery.
- IRA beneficiaries who are at least 70½ years old may made a QCD gift from an inherited IRA.
- An IRA distribution that is used as a QCD may NOT also be deducted as a regular charitable contribution.
- Other specific rules may apply in certain situations.
By making your charitable contribution through a Qualified Charitable Distribution rather than writing a check, the portion of your IRA distribution that would normally go for paying income tax will go instead to charity. This strategy allows you to maximize the amount you are giving; while also minimizing the amount you are paying in taxes. Plus there is no net impact on your personal income.
Your Covenant Trust Company Financial Services Representative would be happy to meet with you and explain how you might use a QCD from your INRA to help meet your financial goals and charitable dreams.
Peter J. Heintzelman
Vice President, Marketing & Financial Services
Covenant Trust Company
Reference: Advanced IRAs by Ascensus, Inc. [Brainerd MN]