New IRA Charitable Rollover
On August 17, 2006 President Bush signed the Pension Protection Act of 2006 which allows for current charitable rollover gifts from individual retirement accounts. Under the provisions of the act, donors age 70 ½ and older can rollover up to $100,000 each year during 2006 or 2007 to public charities from regular and Roth IRAs. Individuals who are required to take unneeded IRA withdrawals, and others who have experienced limitations on tax benefits in the past, may find the new law of particular interest. Please note that the act does not allow charitable rollovers to private foundations, donor advised funds, supporting organizations or to deferred gift plans.
With a charitable rollover gift the distribution will not be included in the donor’s federal taxable income, simplifying the donor’s tax return and avoiding tax that would have been due upon the distribution. It also appears that an IRA charitable rollover by the end of 2006 will qualify for all or part of the IRA owner’s required minimum distribution for 2006. For more information about the tax advantages and consequences of a charitable rollover based on your individual circumstances, please consult your tax advisor.
Although the provisions of the act apply only to those donors over 70 ½, it is still possible for individuals between 59 ½ and 70 ½ to make a tax-friendly charitable contribution from an IRA or other retirement account. While the amount withdrawn and donated is reported as income, the amount can generally be deducted as a charitable contribution, resulting in a virtually tax-free gift. Again, check with your tax advisor for more information.
The IRA charitable rollover is effective and available immediately; contact your IRA custodian to direct a charitable rollover gift to the Tech Foundation or other charitable organization. To enjoy the benefit of this two-year opportunity, you must complete each year’s transfer prior to December 31 of each year.
For information about how your gift benefits Tech, or to discuss other gift opportunities, please contact the Tech Foundation at 318-255-7950 or 1-800-738-7950.