This August, President Bush signed into law new tax incentives for charitable gifts from donors aged 70 1/2 and older. The Pension Protection Act of 2006 allows you to make a lifetime gift using funds from your individual retirement account (IRA) without undesirable tax effects.
Until now, gifts taken from IRAs were treated as taxable income. Charitable deductions were allowed for these gifts, but only up to 50 percent of the donor’s gross adjusted income. That meant that some donors were paying more in income taxes than if they hadn’t made the gifts.
Now, gifts from IRAs can be made simply and without tax complications. You may contribute funds this way if:
As an example, a donor, aged 80, has $450,000 in her IRA and has pledged to contribute $75,000 to Loyola this year. If she transfers $75,000 from her IRA, she’ll avoid paying income tax on this amount. She cannot, however, claim it as a charitable deduction. She’s found an easy way to benefit charity without tax complications—and she can contribute up to $100,000 per year in 2006 and 2007.
For more information on the Pension Protection Act and how it may be appropriate for you, contact Jamie Orsini, director of planned giving, at jorsini@luc.edu or 312-915-6424.