Monday, January 01, 2007

New Opportunities for Donors

Enacted on August 17, 2006, the Pension Protection Act of 2006 allows taxpayers age 70½ and older to make tax-free "qualified charitable distributions" totaling up to $100,000 per year from traditional Individual Retirement Accounts (IRAs) or Roth IRAs during 2006 and 2007.

How does the Charitable IRA Rollover work?
Taxpayers over 70½ are required to make annual distributions from their retirement accounts. The distributions are included in the taxpayers' adjusted gross income (AGI), and taxpayers pay taxes on them. The Charitable IRA Rollover permits taxpayers to make donations directly to charitable organizations from their IRAs without counting them as part of their AGI and, thus, without paying taxes on them.

What do you need to know to take advantage of the Charitable IRA Rollover?

* Give Now: Only contributions made between January 1, 2006 and December 31, 2007 are eligible for the enhanced tax benefit.

* Age Requirement: You must be 70½ or older when the distribution is made.

* Donation Limit: Your total combined charitable IRA rollover contributions cannot exceed $100,000 in any one year.

* Eligible Charities: Any charitable contributions you make from an IRA must go directly to a public charity. Contributions to supporting organizations, donor-advised funds, and private foundations, except in narrow circumstances, do not qualify for the tax-free treatment. Contact the recipient charity to confirm that it is eligible to receive tax-free gifts from IRAs. (Campbell Lodge Boys' Home is an eligible public charity.)

* Eligible Retirement Accounts: Distributions can only be made from traditional Individual Retirement Accounts or Roth IRAs. (Charitable donations from pension plans, 401(k) plans, and other retirement plans are not eligible for the tax-free treatment.)

* Direct to the Charity: Distributions must be made directly from the IRA trustee payable to the public charity.

* No Gifts in Return: You cannot receive any goods or services in return for charitable IRA rollover contributions in order to qualify for tax-free treatment.

* Written Receipt: In order to benefit from the tax-free treatment, you must obtain written substantiation of each IRA rollover contribution from each recipient charity.

Interested in making a donation to Campbell Lodge Boys' Home from your IRA in 2007? Please call Steve Hegge, Director of Development, at 859-781-1214 x114.

Thank you to our Planned Giving Advisory Group for providing this information. Consult your lawyer, accountant, or financial advisor for professional guidance.