Pension Protection Act of 2006
The Pension Protection Act of 2006 approved the "IRA charitable rollover provision," which allows donors to make tax-free distributions to charity from an IRA (individual retirement account). Set to expire on Dec. 31, 2007, this opportunity is an excellent way to promote Glen Lake's mission.
Who can take advantage of this opportunity?
Donors must be 70½ years of age or older at the time of the distribution to charity.
What does the IRA charitable rollover provision allow that I couldn't do before?
Lifetime gifts from IRA assets traditionally have been a bad choice for donors because the amount of the withdrawal was included in gross income and often was not offset fully by the charitable contribution deduction, thereby resulting in a taxable event. The Pension Protection Act allows individuals to make distributions of up to $100,000 from an IRA to charity without the risk of any additional tax burden.
Are there any restrictions on how I can designate my gift?
Gifts can be designated to certain giving opportunities. However, there are some limitations. Gifts must be outright, not to donor-advised funds, charitable gift annuities or charitable remainder trusts.
Can I take a tax deduction on my gift?
No, the IRS did not allow a double benefit with this provision. Because the distribution (which can count as your required annual distribution) is excluded from gross income, it does not qualify for a charitable income tax deduction. (Also, charitable IRA contributions beyond $100,000 will not be eligible for the tax-free benefits and will be counted as part of your gross income.)
Can I use any retirement plan to make my gift?
Distributions can be made only from traditional IRAs or Roth IRAs. Donations from 403(b), 401(k) and other retirement plans are ineligible.
How do I make my IRA gift?
- Contact Grant Harris for assistance in initiating this important transfer.
- Send a written request to your IRA plan administrator requesting that the distribution be made payable to Glen Lake Camp & Retreat Center.
- Designate your gift. You may wish to make a designation to a certain giving opportunity.
Who can benefit from the IRA charitable rollover provision?
- Individuals who are required to take minimum distributions but do not need the additional income;
- Individuals who do not itemize their deductions;
- Individuals who usually give 50% of their adjusted gross income to charity;
- Individuals who are subject to the 2% rule that phases out a portion of the charitable deduction;
- Individuals who do not want their required annual distribution or charitable gift to change their income tax bracket;
- Individuals who live in states that do not permit tax deductions for charitable donations; or
- Individuals who want to promote Glen Lake's mission.