Your IRA: A Window of Opportunity

New legislation eases gift-giving restrictions for individuals 70½ or older

There’s good news for individuals aged 70½ or older with individual retirement accounts. Thanks to the Pension Protection Act of 2006, a simple, tax-friendly option has joined your stable of charitable giving possibilities.

Under the new law, you can now make an outright gift using IRA funds without tax complications. Previously you would have had to report money taken from your IRA as taxable income. You could then take a charitable deduction for the gift, but only up to 50 percent of your adjusted gross income. In effect, some donors paid more in income taxes than they would have if they hadn’t made a gift at all.

Now you can easily make a gift while you are living and able to witness the benefits of your generosity. While you will not pay income tax on the amount, you also cannot claim a charitable deduction.

You may contribute funds this way if:

• You are age 70½ or older
• The gift is $100,000 or less
• You make the gift on or before Dec. 31, 2007
• You transfer funds directly from an IRA or Rollover IRA
• You transfer the gift outright to one or more public charities (This excludes IRA transfers to charitable trusts, donor advised funds and supporting organizations.)

Be sure to contact tax professionals and your IRA custodian if you are considering a gift under this new law. Also feel free to contact our planned giving department with any questions.

Click here (  PDF, 15KB) to download a sample request letter for direct charitable contribution from individual retirement account (IRA).

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