When the financial crisis bail-out plan was signed in October, it offered much more than a safety net for the credit market—it extended a great IRA benefit!

The Emergency Economic Stabilization Act of 2008 includes an IRA charitable rollover tax extender. This clause permits IRA owners over age 70 ½ to transfer up to $100,000 per year to public charities tax free.

If you have an IRA and want to support Ronald McDonald House you can use an IRA rollover this year. It is especially useful to those of you who do not itemize deductions on your individual
income tax return. By making charitable gifts directly from your IRA, you can reduce your income tax liability, as the distribution will not be included as income to you.

Not sure if this meets your needs? Here is an example of how it can help.
Mary Ann retired 10 years ago after working for thirty years as a nurse. She cares greatly about the children who stay at Ronald McDonald House and wanted to give a generous gift. She does not itemize deductions. Since her IRA has a required payout for this year of $2,000, she decided to make a gift of the entire $2,000 directly from her IRA.

Because Mary Ann is 72, by transferring $2,000 directly to the House she will not pay taxes on her distribution for the year. If she took the distribution, and then donated the $2,000, she would pay income tax on the $2,000 and receive no charitable deduction.

For additional information about other ways to support the families staying at Ronald McDonald House Charities, please contact us at (956) 412-7200. As always, please consult a financial advisor for tax advice.

— “A Better Way to Save on Taxes,” Ronald McDonald House at Stanford, Around the House,
Fall 2008, Volume 15, Issue 3.