Giving: Use Your IRA Like Never Before
On Aug. 17, 2006, President Bush signed into law new tax incentives for charitable gifts from donors who are 70½ or older. The Pension Protection Act of 2006 encourages financial support of charitable organizations across the United States.
The act includes a provision providing that during the remainder of 2006 and during 2007 a person age 70 ½ or older may withdraw up to $100,000 each year from their regular or Roth IRA and give it to a public charity without paying income tax upon the withdrawal. An IRA rollover under this new law accomplished by the end of this year will qualify for all or part of the IRA owner's required minimum distribution for 2006.
Note that a tax-free rollover under the act may not be made into a life income gift (such as a charitable gift annuity or charitable remainder trust). Also, there is no charitable income tax deduction for such a tax free IRA rollover.
Previously you would have had to report any amount taken from your IRA as taxable income; take a charitable deduction for the gift, but only up to 50 percent of your adjusted gross income. In effect, this caused some donors to pay more in income taxes than if they did not make a gift at all.
How the Law Works:
You are age 70½ or older
The gift is $100,000 or less each year
You make the gift on or before Dec. 31, 2007
You transfer funds directly from an IRA or Roth IRA
You transfer the gift outright to one or more public charities
How to Make a Gift
Contact your IRA custodian to transfer your desired gift amount to an eligible organization.
For More Information
It is wise to consult tax professionals if you are contemplating a gift under the new law. Please feel free to call the Advancement Office at (773) 256-0712 with any questions.
Although this information may not be applicable to you, please consider sharing it with friends and relatives for whom it may be beneficial in their own personal philanthropy
|