Fact sheet about the new IRA Charitable Rollover Provision

On Aug. 17, President George W. Bush signed into law the Pension Protection Act of 2006.  It contains an IRA Charitable Rollover Provision. It allows people who are at least 70-1/2 to make a tax-free distribution of up to $100,000 annually from an IRA to charity.

Provision highlights:

• The provision applies only to transfers made before December 31, 2007.

 

• You must be age 70-1/2 or older at the time of the distribution to charity.

• Distribution is limited to a maximum of $100,000 per taxpayer, per year.

• If you are married, you and your spouse can donate up to $200,000 provided each of you owns at least one IRA and you can each make a qualified charitable distribution of $100,000 from your plans.

• Gifts must be outright. The contributions cannot be used to fund gift annuities or charitable remainder unitrusts.

• Gifts cannot be made to donor advised funds and supporting organizations, including most private foundations.

• This opportunity applies only to traditional IRAs and Roth IRAs, not to other forms of retirement plans such as 401(k), 403(b), etc. (Note that making a gift from a Roth IRA is ill advised in most instances, as Roth distributions are typically not taxed.)

• Gifts must be transmitted directly from your IRA's plan administrator to charity.

• Because no income will be reported on your tax return, you will not receive a charitable income tax deduction for the contribution.

Benefits to you:

• Any qualified charitable distribution that you make will "count" toward your required minimum distribution – the amount you are required by law to withdraw annually beginning at age 70 1/2.

• This is a unique opportunity because it is a tax exclusion, which means you do not have to report the IRA withdrawal as income on your tax return.

• Distributions are not subject to deduction limitation rules that might otherwise reduce the tax benefits.

• In addition, an IRA charitable rollover will not affect your other charitable gifts to which deduction limitations apply.

If you wish, we can contact your IRA plan administrator to arrange a distribution of any amount up to $100,000.

To learn more, call the Dartmouth Gift Planning Office at 1-800-451-4067.

Or e-mail: Gift.Planning@Dartmouth.EDU

To read a Library of Congress summary of the Pension Protection Act of 2006, visit:  

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:h.r.00004:

To read a summary of the act's charitable provisions, visit:

http://www.ncpg.org/gov_relations/Pension%20protection%20ACT.pdf