Wilkes University

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Take advantage of the new tax code changes.

In August 2006, President Bush signed into law the Pension Protection Act of 2006. This bill contains a two-year IRA Charitable Rollover provision that will allow people age 70½ or older to exclude up to $100,000 from their gross income for a taxable year for direct gifts from a traditional or Roth IRA to a qualified charity.  This provision is available until December 31, 2007.

Here is how it works.
  1. The donor must be 70½ at the time of transfer. At this point, the gift should be made on or after the donor turns 70½ to ensure favorable tax treatment for that tax year.
  2. The transfer must pass directly from the IRA custodian to the qualifying charity.
  3. The transfer is limited to $100,000 per tax year.
  4. The transfer is not limited to 50% of adjusted gross income (AGI) like other cash gifts.
  5. The Act applies only to traditional, rollover, and Roth IRAs, not to other types of plans like 401(k), 457, 403(b), etc. However, funds from the other types of retirement plans may be rolled into a traditional IRA in order to make the gift.
  6. The transfer cannot be made to a donor advised fund or a supporting organization.
  7. The transfer cannot be used to fund a charitable gift annuity or a charitable remainder trust.

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