The Provision

At the end of December - 2011, the Federal provision for Qualified Charitable Distributions expired. That provision allowed alumni and friends age 70 1/2 or older to make direct distributions from their IRA account to Purdue University, bypassing recognition of the distribution as income. 

With the expiration of this provision, you can still make charitable contributions of money distributed from your IRA. The difference is that these contributions would be no different from a contribution from your savings account or regular income. In order to achieve a tax advantage from the contribution, you will itemize the charitable contribution on your tax return. Of course, in addition to this, if the money is from your IRA, you will also have to recognize the distribution as income for tax purposes.

Keep posted to our website for up to date information on the status of the expired provision as this year unfolds. Bear in mind this provision has expired and subsequently been extended in the past, so it is possible it could be extended again at some point in the future. In the meantime, it is important to review both approaches to fully understand the differences.  

THE OLD WAY

You could make a direct distribution from your IRA account to Purdue University. Then when you were ready to file your tax return for the year, you would not include the amount of the direct distribution to Purdue as income. This contribution could also include your Required Minimum Distribution (RMD) for the year as well.

THE NEW WAY

Anyone over the age of 59 1/2 can take a distribution from their IRA and send it to Purdue University. Then when you are ready to file your tax return for the year, you would take the charitable contribution as an itemized deduction and show the IRA distribution as income.

Questions

Please contact Planned Giving at (800) 677-8780 or plangift@purdue.edu.

This information is not intended as legal, accounting, tax, investment or other professional advice.