Extension of the Charitable IRA Rollover Benefits

This is clearly a difficult time for the financial and investment markets. We want to assure you that we are working especially hard to monitor our diversified investment allocation in this uncertain environment. One sign of the unprecedented nature of this situation is that President Bush signed the Emergency Economic Stabilization Act (ESSA) of 2008 into law on October 3, 2008 to, among others things, provide federal funds to purchase distressed assets from the nation's banks. 

However, there may be a silver lining in the EESA for some. The EESA contains an extension of the charitable IRA rollover benefits that were first part of the Pension Protection Act of 2006. Under EESA 2008, in tax years 2008 and 2009, donors will again have the ability to directly donate funds--free of income tax--from their individual retirement accounts (IRAs) to a qualified charity. Donors do not receive an income tax charitable deduction for the gift, but the money is excluded from taxable income when computing taxes.

A Few Things about the IRA Rollover Benefits:

•  Outright gifts of up to $100,000 can be made directly to the charity in tax years 2008 and 2009;
• Individuals must be 70 1/2 at the time of distribution;
• Distributions can be made from an IRA or Roth IRA;
• Charitable distributions count toward minimum distribution requirements, which would usually be taxed;
• Charitable distributions to fund planned gifts--like a charitable gift annuity or a charitable remainder trust--are not permitted;
• The transfer must be made directly from the IRA to the charity.

As always, we encourage you to consult with your financial advisor about this law, especially as it relates to state and federal income taxes.

The planned giving staff at the University of Maine Foundation is always available to be of assistance to you. Call us at 800.982.8503 or 800.449.2629.

Below are sample transmittal letters in case you would like to take advantage of this IRA opportunity with a gift to the University of Maine Foundation to benefit the University of Maine.

Sample Transmittal Letters

(You can copy the text from the transmittal letters and paste them directly into your word processing program)

Sample Request from Plan Owner to Administrator for Charitable Distribution from Individual Retirement Account

RE: Request for Charitable Distribution from Individual Retirement Account

Dear Sir or Madam:

Please accept this letter as my request to make a direct charitable distribution from my Individual Retirement Account # (Account Number) as provided by the Emergency Economic Stabilization Act of 2008 (H. R. 1424) signed into law on October 3, 2008.

Please issue a check in the amount of $___________ payable to the organization at the address below:

It is my intention to have this transfer qualify for exclusion during the 2009 tax year. Therefore, it is imperative this distribution be postmarked no later than December 31, 2009.

If you have any questions or need to contact me, I can be reached at (telephone).

Thank you for your assistance in this matter.

Sincerely,

(Plan Owner) 

Cc: University of Maine Foundation

Sample Letter from Donor Informing Charity of Forthcoming Qualified Charitable Distribution from Administrator
 

Dear University of Maine Foundation:

It is my pleasure to inform you that I have requested a qualified charitable distribution from my Individual Retirement Account payable to your organization in the amount of $____________ from my plan trustee/administrator, ( name of trustee/administrator). Please use my gift for __________________________________________________

It is my intent to comply with the requirements of the Emergency Economic Stabilization Act of 2008 (H. R. 1424) in connection with this gift. 

Accordingly, upon your receipt of payment from my trustee/administrator, please send me a contemporaneous written acknowledgement that states the amount of my gift, that no goods or services were transferred to me by your organization in consideration of this gift, and that my gift will not be placed in a donor advised fund or supporting organization.

If you have any questions or need to contact me, I can be reached at (telephone).

Sincerely,

(Donor)