Make Tax-Free Gifts From Your IRA

December 1, 2008

In October 2008, Congress re-authorized a law that allows donors to make tax-free charitable gifts from both traditional and Roth individual retirement accounts.  IRA owners age 70½ and older can transfer up to $100,000 tax-free to charitable organizations like the Institute for Justice (tax ID 52-1744337).

If you are 70½ or older and are required to take minimum withdrawals, but do not need them for personal use, this may be a great way to make a gift to IJ and help us in the fight for freedom.  The provision will be in effect for tax years 2008 and 2009—to take advantage of this opportunity for tax year 2008, you must act by December 31.

Here is an example of how this provision works:Suppose John Q. Justice has $500,000 in an IRA and will be required to withdraw approximately $25,000 this year.  Suppose he also wants to contribute $20,000 to IJ.  John can authorize the administrator of his IRA to transfer $20,000 to IJ and $5,000 to himself.  The $20,000 distributed to IJ will not be subject to tax but will be counted toward his annual minimum distribution.

(Please note that IRA administrators don’t always include the donor’s name on distribution checks.  If you decide to make a gift from your IRA, please let us know so that we can identify your gift and thank you properly.)

If you have questions about gifts of retirement assets, please feel free to contact Melanie Hildreth at [email protected] or (703) 682-9320 ext. 222, or by mail at 901 North Glebe Road, Suite 900, Arlington, VA 22203.

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