2009 IRA Charitable Rollovers

The recent financial system bailout has provided non-profit organizations with the opportunity to utilize several "Tax Extenders" including the IRA Charitable Rollover. This rollover provides a creative way for our patrons to give to Alfred State College.

The IRA Charitable Rollover legislation extends the opportunity for individuals age 70 ½ and older to make direct transfers from their IRA of up to $100,000 in 2009. These transfers can be made to the charity of choice without having to recognize the transfer as income. Additionally, any transfers that are made count toward the annual minimum required distribution each individual over 70 ½ is required to take from their retirement accounts.

For more information regarding the IRA Charitable Rollover and how it can work for you and for Alfred State College, you may review the FAQ below, contact the Office of Institutional Advancement by phone (607) 587-3930, or fill out our online form. It will be our pleasure to serve you.

Frequently Asked Questions

Who qualifies for this new program?

Any individuals who are age 70 ½ at the time of the gift are eligible to participate.

How much can I transfer?

Any amount up to $100,000 during 2009 can be transferred.

How long is the charitable rollover option available?

This option expires on Dec. 31, 2009.

From what accounts can I make a transfer?

All transfers must come directly from IRAs to the chosen charity, i.e., Alfred State College. If donors have retirement funds in a 401(k), 403(b), etc., they must first roll those funds into an IRA, and then the donor can order the IRA to transfer funds from the IRA to the charity.

What are the Federal and State Tax implications?

• Federal: Donors do not recognize the transfer as income, provided funds go directly from the IRA provider to the charity. It should be noted, however, that donors are not entitled to an income tax charitable deduction for this type of gift.
• State: Each state has different laws, so it is a good idea for donors to consult their own financial advisers. Some states have a state income tax and will include this transfer as income. Within those states, some will allow these gifts as a state income tax charitable deduction. Other states will base their state income tax on the federal income and federal tax paid, and still other states have no income tax at all.

Sample IRA Charitable Rollover Illustration

This year, Roxana (age 73) needs to take a minimum distribution of $20,000 from her personal IRA. This distribution would be taxable. Since Roxana has a marginal tax rate of 35%, she will pay $7,000 in income on this distribution. If she wishes, Roxana could donate the remaining $13,000 to the College and take a charitable deduction for that amount. That deduction may be subject to certain limitations.

Instead, Roxana could take advantage of the IRA Charitable Rollover. Because she is over 70 ½ she can direct a $20,000 distribution directly from her IRA to Alfred State College. This action satisfies the IRA distribution requirement. The $20,000 that she has directed from her IRA to Alfred State College is excluded from her federal income, and as a result, she is not taxed on the $20,000. Equally important to both Roxana and the College is that this gift is immediately available for use in the advancement of Alfred State College. This program is a very easy way for Roxana to increase the impact of her philanthropic efforts, but more importantly, it is a thoughtful way to put available resources to good use rather than losing 35% to taxes.