Vice President for Institutional
On Aug. 17, 2006, President Bush signed into law new tax incentives for
charitable gifts from donors who are 70½ or older. The Pension Protection Act of
2006 encourages financial support of charitable organizations across the United
Under the law, you can make a lifetime gift using funds from your individual
retirement account (IRA) without undesirable tax effects. Previously you would
have had to report any amount taken from your IRA as taxable income, and then
take a charitable deduction for the gift, but only up to 50 percent of your
adjusted gross income. In effect, this caused some donors to pay more in income
taxes than if they didn’t make a gift at all.
Fortunately, now these IRA gifts can be accomplished simply and without tax
complications. Plus, you can make the gift now—while you are living and able
to witness the benefits of your generosity.
You may contribute funds this way if:
• You are age 70½
• The gift is $100,000 or less each year
• 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 a public charity
• You cannot receive benefits in exchange for the gift
How the New Law Works
John, aged 75, has $535,000 in an IRA and has pledged to give $55,000 this year.
If John transfers $55,000 from the IRA, he will avoid paying income tax on that
amount. He cannot, however, claim a charitable deduction—it is a pure “wash.”
John has found an easy way to benefit charity without tax complications.
If his spouse has an IRA and is 70½ or older, she can also give up to $100,000
How to Make a Donation
Prior to making a gift, contact Alan P. Duesterhaus in the Institutional
Advancement for any special instructions. Then contact your IRA custodian to
transfer your desired amount.
For More Information
It is wise to consult tax professionals if you are contemplating a gift under
the new law. Please feel free to call me at 800-849-8771, ext. 241, or e-mail me
email@example.com with any questions.