The Pension Protection Act of 2006 IRA Charitable Rollover
What is the new legislation?
Making gifts from IRA funds are subject to tax if withdrawn voluntarily or under mandatory withdrawal requirements. Now, the Pension Protection Act of 2006 (PPA) permits individuals to rollover up to $100,000 from a traditional or Roth individual retirement account (IRA) directly to a qualified charity without recognizing the assets as income. Simply put, donors can make gifts directly to qualified charities tax-free.
Why is this beneficial?
Assets held in IRA accounts are not only subject to income tax when withdrawn during one's lifetime or by survivors, but they may also be subject to estate tax if left to loved ones other than a spouse. To prevent these taxes, you may want to consider taking advantage of the PPA and giving a charitable gift now, tax-free.
Who will this benefit?
If you already give up to your 50% charitable deduction limit of your adjusted gross income, this legislation may allow you to exceed that limit over the next two tax years. For those of you who currently do not itemize your deductions, this will allow you to make gifts from your IRA without increasing your annual income. Or, if you already have the majority of your assets in IRAs, it may be more convenient to make a direct transfer rather than report a withdrawal on your income tax return.
Effective: Immediately until December 31, 2007
New IRA Charitable Rollover Details:
- The donor must be at least 70 � years old at the time a transfer (rollover) is made to National Geographic
- The transfer must be made from the IRA directly to National Geographic (not to donor)
- Transfers must be made between now and December 31, 2007
- The total value of transfers made (whether to one or more charities) can be up to $100,000 in any taxable year
- A couple with separate IRAs could each give up to $100,000 for a total of $200,000
- Transfers are not included in your adjusted gross income for federal income tax purposes
- Transfers to charity may count as part of your annual mandatory IRA withdrawal amounts
- The gift must be an outright gift made from your IRA directly to charity, otherwise you must declare the distribution as income
- The plan must be a traditional IRA or a Roth IRA; it cannot be an employer-sponsored plan such as a SIMPLE IRA, a 401(k) or 403(b) plan, or a simplified employment pension (SEP) plan. However, you can check with your adviser to determine if you can transfer funds from another account to an IRA and then make charitable gifts.
- Transfers are not deductible as charitable gifts
- You may receive no benefit from National Geographic for your transfer
- Transfers cannot be used to establish a charitable gift annuity, charitable remainder trust, or pooled life income fund
- Transfers cannot be made to donor-advised funds or private foundations
- You must obtain documentation for the transfer as you would substantiate any other gift to charity
For more information on this opportunity or how to make a contribution to the National Geographic Society, contact your professional adviser and the Office of Gift Planning by phone at +1 800 226 4438, or by e-mail at
plannedgiftinfo@ngs.org.
You should always consult your own financial and legal advisers before making a charitable gift.
