Economic Rescue Package Includes Help for Charities

As part of the Emergency Economic Stabilization Act of 2008, the U.S. House of Representatives passed a two-year extension of Charitable IRA legislation, making it easier for Americans to give to causes they care about. The Charitable IRA provision, first enacted for 2006 and 2007, has the power to help local charities weather the current economic crisis. The extension goes through 2009.

In these financially turbulent times, millions of Americans continue to save pre-tax dollars in individual retirement accounts (IRAs). Thanks to regular investments and long-term returns, an estimated $4.7 trillion is invested in IRAs. The new law allows taxpayers 70 ½ and older to give retirement savings directly to charity, bypassing income tax to themselves or to their beneficiaries. The tax benefit expires December 31, 2009.

“It is a win-win—for people who would rather give to charity than pay taxes and for the nonprofit organizations they choose to support,” said Peggy O’Shea, president & CEO of The Community Foundation of Herkimer & Oneida Counties, Inc.

“For larger estates, a good portion of IRA wealth goes to estate taxes and income taxes of beneficiaries,” O’Shea said. “Experts estimate heirs may receive less than 50% of IRA assets that pass through estates.” Read more here.