IRA Charitable Rollover

Although it has only been in effect since August 2006, the Charitable Rollover Provision of the 2006 Pension Protection Act has already led Americans to make millions of dollars in new charitable donations from their IRAs. Initial reports from the National Committee on Planned Giving already show that during the first four months that the provision was in effect, more than $50 million dollars was given to nonprofits through the IRA rollover. Although there is new possible legislation, which is working its way through Washington, the current legislation ends on December 31, 2007.

The 2006 Charitable Rollover Provision allows individuals who have reached the age of 70½ years to make tax-free distributions from IRAs and Roth IRAs to charitable organizations through December 31, 2007. These "qualified charitable distributions" (QCD) must pass directly to the charity, and as such are not recognized as income and therefore, are not taxable, at least for federal tax purposes. It is important to note that because an individual doesn't include the amount in his/her income the individual may not take a charitable deduction for the contribution. QCDs can total up to $100,000, and can be counted as part of a minimum distribution. In return, the charity must provide a specific written receipt of this contribution.

A member of AFB's staff and a donor, Gail Drumright, is making her annual gift through her IRA, using this Rollover Provision. She feels that the provision has made it easier than ever for older individuals to donate money from their IRAs to charity. She says, "I wanted to increase my annual giving to AFB. Now I have found a way! It's a win-win situation, which is unusual for the tax code. IRA owners who are 70½ or older are required to withdraw a minimum amount each year and pay taxes on the money, even if they don't need it. By donating money directly to AFB, I do not incur a tax bill on the amount withdrawn. AFB benefits, and so do I."

Gifts from IRA accounts, as well as other planned gifts, qualify you as a member of the Helen Keller Society. Gail, already a member, says, "As a member of the Helen Keller Society, I have left a bequest to AFB. The decision made me feel good, and gave me peace of mind. That plan will not change, but giving money away while I am alive is very satisfying!"

If you would like more information on the 2006 Charitable Rollover Provision or other ways to make a gift using your IRA or other retirement plans, please contact me at (212) 502-7623 or via e-mail at syoung@afb.net.