The Pension Protection Act of 2006 (PPA) provided an important new way of making a charitable gift. Donors can make direct gifts from individual retirement accounts (IRAs) to George Fox and other charities. These gifts can be made without any income tax consequences. Prior to passage of the PPA of 2006, gifts from IRAs would have been included in the donor's gross income and treated as a charitable deduction
The following conditions apply:
� The donor must be 70 ½ of age or older .
â?¢ The transfer must go directly from the IRA to George For or other charity.
â?¢ Gifts can be made for up to $100,000.
â?¢ Gifts must be made outright . Transfers to donor advised funds, charitable remainder trusts and gift annuities do not qualify.
â?¢ Under current law, this opportunity expires at the end of 2007 .
The charitable transfer of IRA distributions may be applied to the plan owner's required minimum distribution (RMD) requirements for the year. For example, if an IRA owner is required to withdraw 5% from his or her IRA for the year, he/she could direct up to $100,000 to charity in satisfaction of the RMD.
The distribution must be made directly from the trustee of the IRA to the charity. Donors should not take a distribution themselves and then write a check to the charity.
Are you a good candidate for an IRA gift this year?
� Do you have an IRA and are over age 70 ½? Other retirement accounts such as 401(k) plans are not eligible, although it may be possible to "roll over" these plans into IRAs and then make qualified gifts.
� Do you use the standard deduction in computing your taxes? Some donors give significant gifts to George Fox and other charities but receive no tax benefit because they are unable to itemize their deductions. Gifts from an IRA will count against the annual distributions required of IRA owners over 70 ½. Your taxable income will be reduced by amounts transferred to charity by the IRA custodian, even though you can't claim a charitable deduction.
â?¢ Do you pay income tax on Social Security payments? IRA gifts that replace required minimum IRA distributions will reduce a retiree's modified adjusted gross income - possibly resulting in lower taxes on Social Security benefits.
â?¢ Are you subject to tax penalties because you have a high adjusted gross income (AGI)? People with high adjusted gross incomes are liable to lose 2% of certain itemized deductions and 2% of their personal exemptions for 2007. Some expenses are deductible only to the extent they exceed a certain percentage of AGI, example: 7% for medical expenses. Because IRA gifts reduce AGI by taking the place of taxable distributions, the above penalties and cutbacks may be reduced for friends who give through their IRAs.
â?¢ Do you want to reduce taxes on your estate? IRAs are subject to both income taxes and estate taxes after the owner dies; result in overall taxes of 70% or more. Making qualified IRA gifts in 2007 avoids these taxes.
â?¢ Can you deduct all of charitable contributions? The most anyone can deduct in any one year is 50% of your AGI (excess deductions can be carried over for up to five years). But gifts made directly from IRAs aren't considered under this 50% limitation, which makes possible extra tax benefits for those who would like to make large gifts in 2007.
Now may be the last opportunity to take advantage of this gift opportunity.
If you would like more information on gifts of IRA funds to George Fox University, please contact Al Zimmerman , director of planned giving, at 503-554-2106, or email azimmerman@georgefox.edu .
This page was last updated 3-29-2008 13:27:03.
For questions or comments about this page, please email the webmaster.
