The $700 billion Emergency Economic Stabilization Act passed into U.S. law in October renewed the IRA rollover benefiting charities like the University of Louisville. If you are age 70-1/2 or older you can make a gift from your Individual Retirement Accounts (IRAs) to the University of Louisville without paying federal income tax on the distribution. This applies to the tax years 2008 and 2009.

• The gift can count towards your minimum required distribution.

• Only distributions from an IRA or a Roth IRA qualify. Distributions from employer-sponsored retirement plans, such as 401Ks, and 403Bs, do not qualify.

• You must direct the IRA manager to transfer funds directly from the IRA to the University of Louisville.

• The maximum amount eligible per IRA is $100,000 per IRA owner per year.

• The charity must be a tax-exempt organization to which deductible contributions can be made, such as the UofL Foundation, Inc. Transfers to donor-advised funds and charitable trusts don’t qualify.

• The distribution is excluded from your income and no federal income tax is owed. Also, no income tax deduction is available.

A rollover would benefit you if:

You don’t itemize your deductions. A qualified charitable distributions from IRA will eliminate the need to claim an income tax charitable deduction. If you don’t itemize, you will enjoy the equivalent of a charitable deduction.

You are unable to deduct your entire contribution because of the 50-percent-of-AGI limitation. If you have taken the maximum income tax deductions due to the 50-percent-of-AGI limitation, you may find you can give more. IRA rollover gifts operate independently of the percentage limitation rules and, therefore, don't affect other gifts subject to the limitations.

Your IRA withdrawal under the old law increases your taxable income. For those with modest incomes, adding IRA withdrawals to your other income might cause more of your Social Security payments to be taxable. For those with higher incomes, the impact of an IRA withdrawal on normal income causes the loss of some other credits, deductions and exemptions resulting in a net income tax cost of making a gift to charity.

You reside in a state where charitable contributions are not deductible on your state income tax return. In states that don’t allow itemized deductions, individuals

who made taxable withdrawals from their IRAs and then donated them under the old rules didn’t receive an offsetting charitable deduction against state income tax. Because states generally follow federal income inclusion rules, IRA rollover distributions should be excluded for state income tax purposes under the new law. Therefore, if you reside in one of these states you will benefit if your state continues to follow the federal rules.

For more information, contact your financial adviser or call Suzanne Guss, assistant vice president for planned giving, 502-852-6954 or 1-866-872-5489.