The Emergency Economic Stabilization Act of 2008 (2008 Stabilization Act) extends through 2009 the provision which allows individuals who are at least 70-1/2; by the end of the year to exclude from gross income qualified charitable distributions up to $100,000 from a traditional or Roth IRA, which would otherwise be included in income. Married individuals filing a joint return are allowed to exclude a maximum of $200,000 for these distributions ($100,000 per individual IRA owner).

As you may know, taxpayers cannot keep funds in traditional IRAs indefinitely. IRA owners must either withdraw the entire balance or start receiving periodic distributions from their traditional IRAs by April 1 of the year following the year in which they reach age 70-1/2. The minimum distribution that is required each year is computed by dividing the IRA account balance as of the close of business on December 31 of the preceding year by the applicable life expectancy. An IRA owner who does not make the required withdrawals may be subject to a 50-percent excise tax on the amount not withdrawn.

Many taxpayers like you, who receive taxable distributions, also contribute to charitable organizations. You can reduce your taxable income by excluding up to $100,000 of your IRA distribution from gross income when you transfer it directly to a charitable organization. This exclusion is available for taxable Roth IRA distributions as well as minimum required distributions from a traditional IRA.