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