FINANCIAL CORNER
Tax-Free IRA Charity Distribution Extended

On October 3, 2008, President Bush signed H.R. 1424, the Emergency Economic Stabilization Act of 2008 (the “Act”), often referred to as the “bailout” bill. In addition to financial bailout provisions, the act also extended an opportunity for charitable giving.

The Pension Protection Act of 2006 created the “qualified charitable distribution”. The original provision expired 12/31/2007, but the bailout bill has extended it for this year and 2009.

Here is how it works. If you are 70 ? or older, you can transfer as much as $100,000 directly from an IRA to a qualified charity without having to pay income tax on the money and the transfer counts toward your required minimum distribution. Assume you are required to withdraw $15,000 from your IRA before December 31, 2008 and you wish to give $10,000 to TACC for its newly purchased permanent site. If you direct your IRA custodian to send $10,000 to TACC directly, the money would count toward your required distribution for 2008 and you would end up reporting only $5,000 in IRA distribution on your tax return. This means your adjusted gross income would only include the $5,000 instead of the $15,000. Having a lower adjusted gross income may be quite beneficial to you in many ways.

Please consult your tax professionals to discuss the tax benefit applicable to your own situation.

By Lily M. Hazelton, CLU, ChFC, CFPR of Brecek & Young Advisors, Inc.
October 20, 2008

The information contained herein is not intended as a substitute for direct financial or legal advice. Brecek & Young Advisors, Inc. does not provide tax advice. Please contact a tax or financial professional for further information.