Ways to Give: The Pension Protection Act of 2006 and Charitable IRA Rollovers
On August 17, 2006 President George W. Bush signed the Pension Protection Act of 2006 (PPA), which permits taxpayers to exclude from their gross income certain distributions from their Individual Retirement Accounts (IRAs) if made directly to a charity. To be a "qualified charitable distribution" the gift must meet the following conditions:
- Donors must be 70 ½ years of age or older when the gift is made. This is also the age at which individuals are required to begin mandatory annual, taxable, withdrawals from their retirement plans, so directing a gift to charity from the plan will also count toward the minimum required withdrawal.
- Transfers must go directly from the IRA plan administrator to qualified charities. If the plan owner first withdraws the cash and then contributes it, it will be considered a taxable distribution. Sample letters (PDF) of instruction are provided here that you may adapt for this purpose.
- Gifts must come only from an IRA or Roth IRA; no other plan is permitted. Plan owners should be able to roll over assets from another plan into an IRA to make a gift.
- Total funds contributed to charities cannot exceed $100,000 per taxpayer per year.
- Such gifts must be completed by December 31, 2007, to qualify for the income tax exemption provided by this new law.
- Gifts must be outright. Transfers to donor advised funds, supporting organizations, and, unfortunately, all life income gift plans do not qualify.
Note: Under the PPA, a distribution from the plan directly to a qualified charity will not be eligible for a charitable income-tax deduction because it is not recognized as taxable income.
If you would like additional information, or have questions about how you might take advantage of this special opportunity, please contact WPI's Planned Giving Office toll-free at +1-888-974-4438 or email planned-giving@wpi.edu.
Read a detailed summary of the charitable provisions (PDF) of the PPA.
Maintained by webmaster@wpi.eduLast modified: July 10, 2007 10:41:20