The Catholic Foundation of South Georgia

Helpful tips on how you can realize tax benefits by making a direct charitable distribution from your IRA.

If you are over the age of 70 ½, you must take a required minimum distribution from your IRA. Normally this money is taxed as ordinary income. However, federal tax legislation enacted on October 3, 2008 permits you, for the remainder of 2008 and throughout 2009, to make a direct gift from your IRA to your parish, your parish school, the Bishop’s Annual Appeal, or the Catholic Foundation of South Georgia, Inc. This gift counts toward fulfilling your required minimum distribution.

For each of the years 2008 and 2009 you can exclude up to $100,000 from your gross income for distributions made directly from your traditional or Roth IRA to a qualified charity. For married couples, each spouse can make a distribution from his or her IRA under the same provisions.

The distribution must be made from your traditional or Roth IRA, and not a 401(k) or other retirement plan. However, consult with your financial or tax advisor about the possibility of transferring funds from one of these other plans to establish an IRA, with the distribution to charity coming from the newly established IRA.

The IRA distribution must be a direct charitable gift and not a distribution to a donor-advised fund, a charitable remainder trust, or for a charitable gift annuity.

To take advantage of the IRA charitable rollover to support the Church, please review the following helpful tips on how to handle your charitable gift correctly:

• Contact your IRA custodian or representative before making a gift to arrange for the proper transfer of funds from your IRA directly to the qualified charity. The check issued from the IRA must be made payable to the charity.
• If you have elected to have income tax withheld from your normal IRA distributions, advise your IRA administrator not to withhold taxes from distributions to charity.
• While this topic is fresh on your mind, ask your attorney and financial advisor how to make the Church a beneficiary of your will or trust or IRA.

Making gifts in 2008 and 2009 from IRA funds that would be subject to tax if withdrawn voluntarily or under mandatory withdrawal requirements may be a wise choice for many. Congress is allowing these individuals with traditional or Roth IRAs to make tax-free gifts directly to qualified charities.

Unchanged is the fact that assets held in IRAs are not only subject to income tax when withdrawn during one’s lifetime or by survivors, but they may also be subject to estate tax if left to loved ones other than a spouse. For that reason, IRAs may be a good choice for some when deciding how to fund charitable gifts.

For more information about how you and the Church can benefit from an IRA charitable rollover, contact the parish office or the Diocesan Office of the Catholic Foundation of South Georgia at (912) 201-4061.

These helpful tips are only for your information on this change in the IRA law and are not to be considered as legal, tax or financial advice. You should consult with your own legal, tax, and financial advisors to implement the benefits of this new law and related matters.