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| Capuchin Franciscan Friars Office of Planned Giving Your Legacy |
| New Tax-Saving Opportunity for Donors Aged 70 1/2 or Older |
On August 17, 2006, President Bush signed into law new tax incentives for charitable gifts from
donors who are 70 1/2 or older. The Pension protection Act of 2006 encourages financial support of the
good work done by charitable organizations across the United States.
Under the new law, you can make a lifetime gift using funds from your individual retirement account
(IRA) without any undesirable tax effects. Prior to the new law, you would have to report any amount
taken from your IRA as taxable income. You could then take a charitable deduction for the gift, but only
up to 50% of your adjusted gross income. In effect, this caused some donors to pay more in income
taxes than they would have if they hadn't made 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:
HOW THE NEW LAW WORKS
Pat, age 80, has $450,000 in an IRA and made a pledge to give us $75,000 this years. If Pat transfers
$75,000 from the IRA directly to us to satisfy the pledge, she will avoid paying income tax on $75,000. At
the same time, however, Pat will not be able to use it as a charitable deduction -it is a pure wash. It is an
easy and convenient way for her to benefit is without tax complications.
HOW TO MAKE A GIFT
Simple contact your IRA custodian for the form necessary to transfer your desired gift amount to the
charitable organization of your choice.
donors who are 70 1/2 or older. The Pension protection Act of 2006 encourages financial support of the
good work done by charitable organizations across the United States.
Under the new law, you can make a lifetime gift using funds from your individual retirement account
(IRA) without any undesirable tax effects. Prior to the new law, you would have to report any amount
taken from your IRA as taxable income. You could then take a charitable deduction for the gift, but only
up to 50% of your adjusted gross income. In effect, this caused some donors to pay more in income
taxes than they would have if they hadn't made 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 70 1/2 or older
- The gift is not more than $100,000
- You make the gift on or before Dec. 31, 2007
- You transfer funds directly from and IRA or Rollover IRA
- You make the gift to a public charity (This excludes gifts made to charitable trust, donor
advised funds and supporting organizations.)
HOW THE NEW LAW WORKS
Pat, age 80, has $450,000 in an IRA and made a pledge to give us $75,000 this years. If Pat transfers
$75,000 from the IRA directly to us to satisfy the pledge, she will avoid paying income tax on $75,000. At
the same time, however, Pat will not be able to use it as a charitable deduction -it is a pure wash. It is an
easy and convenient way for her to benefit is without tax complications.
HOW TO MAKE A GIFT
Simple contact your IRA custodian for the form necessary to transfer your desired gift amount to the
charitable organization of your choice.
Yes! Bring me up to date on tax law changes regarding IRAs.
Please send me the free brochure, How to Make Charitable
Gifts from Your IRA.
Please send me the free brochure, How to Make Charitable
Gifts from Your IRA.
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| The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax or investment professional. |