PENSION PROTECTION ACT 2006 - CHARITABLE GIFTS
Through December 31, 2007, if you are age 70 1⁄2 or older and have
charitable inclinations and wish to give some of your IRA funds to a
charity, you can withdraw up to $100,000 from your IRA tax-free and give
monies to such an entity. You will receive no tax deduction, but you also do
not have to include the contribution in your gross income for the year.
Many older investors welcome this opportunity to make a difference in
their communities and in the world.
The new rules apply only to IRA owners and only to outright IRA gifts that
are transferred directly from your IRA account to a public charity. Gifts
made to grant-making foundations, donor-advised funds or charitable gift
annuities are excluded from these rules.
Another incentive is that under the Pension Protection Act 2006, if you
make charitable donations from your IRA, you can credit this amount
toward satisfying any required minimum distribution (RMD) you might
have from your IRA (s). This strategy can also lower your income and
possibly decrease the tax you pay on your Social Security income. Check
with your tax advisor to determine if a lower annual income may also have
a positive effect on your taxes with regard to deductions, exemptions and
tax credits. If you normally make donations to charities anyway, you may
now want to consider making those donations from your IRA.
Remember that the financial institution will need to make the donation
directly from your IRA to the charity, however, to have this strategy work
for you. At Wachovia Securities, our procedures are in place to help you
execute this gift. Contact your Financial Advisor for help in taking
advantage of this legislation to benefit your favorite charity.
