If you are considering making charitable contributions before the year ends, you may be able to use IRA money. The IRS allows individuals over age 70 1/2 (those subject to the Required Minimum Distribution rules) to transfer money directly from an IRA to an eligible charitable institution. However there are some rules to be aware of:

1. The money must transfer directly to the charitable organization
2. Distributions from SIMPLE-IRAs and SEP-IRAs are not allowed
3. No deduction is allowed on your tax return for the contribution, since it came from pre-tax money (non-deductible contributions are eligible for a charitable deduction)
4. Not all charities qualify – donor-advised funds are not eligible recipients
5. The maximum amount that can be transferred is $100,000.

This option is available only through 2009. This is an appealing strategy for those who don’t itemize deductions and therefore cannot take advantage of the charitable deduction. Also if you normally take money out of your IRA for living expenses, which include charitable deductions, you can reduce the amount of your taxable income.