On October 3rd, the Emergency Economic Stabilization Act of 2008 was signed into law. This law is more commonly known as the “bailout bill” and its main purpose is to provide the Federal Government with authority to purchase and insure certain types of troubled assets. While the bailout bill received widespread press coverage for its impact on the financial markets, you may not know that in its effort to secure passage of this bill, Congress also added certain income tax provisions. In general, these provisions serve to extend tax benefits which had previously expired.
One of the tax benefits which has been extended through this law is the Investment Retirement Account (IRA) charitable rollover provision. This special tax provision allows an IRA owner age 70 ½ or older to make tax free contributions of up to $100,000 per year from their IRA plans to qualified charitable organizations. Qualifying distributions escape your IRA tax free, thereby allowing you to pass more to charity than you otherwise could have donated. This tax benefit previously expired on December 31, 2007, but has now been extended through the bailout bill until December 31, 2009.