| If you are over 70 1/2 years old, want to
| |
| | ordinary income tax.
|
| make a gift for a special charitable
| |
| | 3. If given to a charity, rules which
|
| project, but your only liquid asset is
| |
| | limit the amount that could be deducted
|
| your IRA, I have good news for you.
| |
| | as a charitable contribution would have
|
| On August 17, 2006, the Pension
| |
| | to be followed. This means that they may
|
| Protection Act of 2006 (PPA 2006) was
| |
| | still have to pay tax on a portion of
|
| signed into law. This nearly 1,000 page
| |
| | their IRA withdrawals.
|
| piece of legislation marked the most
| |
| | But thanks to provisions in PPA 2006,
|
| sweeping changes to the pension arena in
| |
| | Roger and Claire can make their gift to
|
| 30 years.
| |
| | the Humane Society and Bill and Diane can
|
| Let me give you two common examples that
| |
| | pay off their church's new organ using
|
| contain problems faced by seniors solved
| |
| | money from their IRAs and not pay any tax
|
| by PPA 2006...
| |
| | on the withdrawals. But they have to
|
| Roger and Claire are retired. Roger spent
| |
| | follow the rules...
|
| his working career in the aerospace
| |
| | 1. First, you must be at least 70 1/2.
|
| industry. He was more than well
| |
| | 2. You can give up to $100,000.
|
| compensated and over the years
| |
| | 3. This only applies to 2006 and 2007.
|
| accumulated a very large 401(k) plan.
| |
| | 4. You can't withdraw the money from your
|
| When he retired, he rolled his 401(k)
| |
| | IRA and then give it to your charitable
|
| into an IRA. Other than their home, the
| |
| | cause. The transfer must be made directly
|
| IRA is far and away their biggest asset.
| |
| | from the custodian of the IRA to the
|
| For years, Roger and Claire have been
| |
| | charity.
|
| supporters of the Humane Society. Their
| |
| | 5. These gifts, called IRA charitable
|
| local chapter is building an entire new
| |
| | rollovers, count towards your required
|
| wing on to their kennels. Roger and
| |
| | minimum distribution for the year.
|
| Claire would love to make a significant
| |
| | 6. IRA charitable rollovers are not
|
| donation-somewhere in the neighborhood of
| |
| | permitted for gifts to donor advised
|
| $50,000 to $100,000.
| |
| | funds and supporting organizations.
|
| Bill and Diane both worked during their
| |
| | However, there are some exceptions that
|
| entire careers. Mary taught 6th grade for
| |
| | apply to funds held by community
|
| 40 years. Bill was a career military
| |
| | foundations: scholarship, field of
|
| officer. After his retirement, he spent
| |
| | interest, and designated funds qualify.
|
| another 20 years working in the private
| |
| | So the first step is to contact your
|
| sector. Like Roger, Bill has a large IRA.
| |
| | intended cause to see how they are
|
| When Bill turned 70 1/2, he was required
| |
| | classified and whether or not the law
|
| to start taking the minimum required
| |
| | allows an IRA charitable rollover gift.
|
| distributions each year from his IRA. But
| |
| | 7. The gift must be a pure gift. In other
|
| Bill and Diane don't need the income;
| |
| | words, there can't be any personal
|
| their other retirement income sources are
| |
| | benefit strings attached like tickets to
|
| more than adequate. Nevertheless, Bill
| |
| | an event.
|
| must take these RMDs and pay tax on them
| |
| | 8. You don't have to report the IRA
|
| as income.
| |
| | charitable rollover as income.
|
| Bill and Diane have been active in their
| |
| | 9. However, you don't get a charitable
|
| church all their married life. Their
| |
| | deduction for your gift. Sorry, you can't
|
| church just bought a new organ. The
| |
| | have your cake and eat it too.
|
| church did not pay cash for the organ;
| |
| | This new law is a real winner. In these
|
| the majority of it was financed. Bill and
| |
| | two examples, the Humane Society is able
|
| Diane would like to pay off the organ.
| |
| | to build new kennels and a church pays
|
| Both Roger and Claire and Bill and Diane
| |
| | off an organ they thought they were going
|
| are warm-hearted people. But, prior to
| |
| | to have to finance. The donors were able
|
| the passage of PPA 2006, their generosity
| |
| | to make it happen despite the fact that
|
| could have been thwarted by several
| |
| | the only real asset they had was an IRA.
|
| things...
| |
| | I do not dispense tax advice. It is
|
| 1. In both cases, their principal liquid
| |
| | imperative that you consult with your tax
|
| asset was an IRA. Neither couple had
| |
| | advisor and the charity to make sure it
|
| other assets from which to make a gift.
| |
| | is qualified and that the gift is made in
|
| 2. If the large sums were withdrawn from
| |
| | the proper manner.
|
| their IRAs, they would be subject to
| |
| |
|
