 |
Charitable gifts from IRAs Tax Freeby Kenneth L. BakerThe Pension Protection Act of 2006 was signed into law by the President on August 17, 2006. Tucked inside its voluminous coverage is a provision of great interest to charitable donors. The new Act provides for Tax-free IRA distributions to qualified charities or donor advised funds. A donor advised fund is a fund established with an entity such as a Community Foundation where the donor advises the Foundation of his or her charitable wishes. Prior to the Pension Protection Act an individual who wanted to use funds from an IRA to make charitable gifts would have to withdraw funds from the IRA, pay income tax on that withdrawal, and attempt to offset that income with a gift tax deduction. The gift tax deduction did not necessarily equal the income and therefore income tax often resulted. Under the new law up to $100,000.00 per year may be donated from either a traditional or Roth IRA and excluded from gross income. The donor must be at least 70 1/2 years of age at the time of the distribution. Such gifts must be made directly by the IRA Trustee to the qualified charity. This beneficial provision is available only in the years 2006 and 2007. There remain only fourteen (14) months in this window of opportunity for persons interested in charitable gifts from their IRAs. A further benefit is that such transfers are not taken into account in determining the charitable deduction available for the year the gift is made from the IRA. A taxpayer who itemizes may not deduct charitable contributions in excess of 50% of adjusted gross income. Hence, charitable gifting from an IRA account during the years 2006 and 2007 will not limit the deductibility of other charitable giving such as one's normal pattern of giving to churches, colleges or foundations. Furthermore, such gifts can be applied toward the minimum required distribution for the donor's IRA in the year the gift is made. If you decide to take advantage of this opportunity, your Peacock Keller lawyer or your accountant can assist you in making sure that you meet all of the technical requirements in the law and receive the benefits outlined above. |
 |
|
|
Home ·
About the Firm ·
Attorney Directory ·
Practice Areas ·
News and Events ·
Contact Us · © 2006 Peacock Keller & Ecker, LLP, 70 East Beau Street, Washington, PA 15301 · Phone: (724) 222-4520 or in PA: 1-800-242-8897 · Fax: (724) 222-3318 · Terms and Conditions |
|