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What is the Emergency Economic Stabilization Act of 2008?
This law allows and individual to transfer their income for otherwise taxable IRA distributions of up to $100,000 per year from traditional or Roth IRAs Qualified Charitable Distributions.
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What is a Qualified Charitable Distribution (QCD)?
Any distribution from a traditional or Roth IRA made directly by the IRA administrator to the Iowa State University Foundation (or any charitable organization) that would have been taxable if distributed to the plan participant.
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Does anyone who wants to make a charitable distribution from their IRA qualify for a QCD?
No. You must have reached age 70-1/2 by the date of the contribution. It is important to distinguish this rule from the rule that requires plan participants to begin receiving the Required Minimum Distributions (RMD) in the same year they attain age 70-1/2.
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What are the effective dates for making a charitable distribution from my IRA?
The rules are effective for transfers made since January 1, 2009. However, charities across the nation are hoping to demonstrate successful gifting activity in order to influence Congress to seriously consider passing additional legislation affording this opportunity beyond 2009. Distribution must be delivered or postmarked to the ISU Foundation no later that December 31st of the year for exclusion.
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Are there limitations on the amount?
Yes. The amount that can be excluded from a plan owner’s income is limited to $100,000 per taxpayer per year. Therefore, a married couple could donate up to $200,000 provided each spouse owns at least one IRA and can each make a qualified charitable distribution of $100,000 from their plans.
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Can I designate this IRA distribution to a specific program(s) or scholarship(s)?
Yes, in most cases. However, you may not receive any quid pro quo benefits in exchange for your contribution. Therefore funds that provide recognition benefits, or other tangible benefits, such as the Cyclone Club, are excluded under the Emergency Economic Stabilization Act of 2008.
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Who is the donor - me (the plan participant) or the plan?
You, the individual/plan participant, are the donor of the QCD.
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Do I receive a tax deduction for a charitable distribution from my IRA?
No. You do not receive a tax deduction for the charitable distribution.
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So what are the advantages of making a charitable distribution from my IRA?
Advantages will vary based on individual circumstances. As always, we recommend that you consult your professional tax advisor. In general, per current tax law, charitable deductions are limited to 50% of a donor’s Adjusted Gross Income (AGI). By making a charitable distribution from your IRA, you will be able to make charitable contributions beyond the above limit without any added tax consequences.
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Are other retirement plans eligible within the Emergency Economic Stabilization Act of 2008?
No. The exclusion applies to traditional or Roth IRAs only. Other forms of retirement plans such as 401(k), 403(b) annuities, defined benefit and contribution plans, profit sharing plans, Keoghs and employer-sponsored SEPs and SIMPLE plans are NOT eligible. However, some of the non-eligible plans may afford the opportunity for rollover into an IRA. You should visit with your plan administrator to explore this option.
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Can the IRA distribution check be made payable to the individual/plan participant, who then endorses the check to the Iowa State University Foundation?
No. In order to qualify for the exclusion, the check must be payable directly to the Iowa State University Foundation.
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Can I direct this IRA distribution to a donor advised fund?
No. The Emergency Economic Stabilization Act of 2008 does not provide this opportunity.
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Can I direct this IRA distribution to a charitable gift annuity or a charitable remainder unitrust?
No. The Emergency Economic Stabilization Act of 2008 does not provide this opportunity.
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Can I designate this IRA distribution to pay on an existing pledge commitment?
Yes. The Foundation will follow the same approach as used for the payment of an existing pledge through a donor-advised fund. We will record the charitable distribution from the IRA as an outright gift and write-off the corresponding donor pledge.
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Will I receive a receipt for the gift?
Yes. As such, the Foundation will provide written acknowledgement to the donor shortly after the gift is received.
