important new legislation affects donations
to non-profit organizations

On August 17, 2006, President Bush signed into law the Pension Protection Act of 2006. Congress has used this bill to enact various charitable giving incentives and reform measures. Of particular interest is the portion of the bill that relates to tax-free withdrawals from certain retirement accounts to fund charitable gifts. A summary of the IRA Charitable Rollover Provision of the Pension Protection Act:

• The provision provides an exclusion from gross income for otherwise taxable IRA distributions of up to $100,000 per year.
• In order to take advantage of the exclusion, the plan owner must have attained at least age 70 1/2 on the date of the distribution to the charity.
• Qualified charitable distributions can be applied in satisfaction of a plan owner's minimum required distribution for the year the gift is made.
• The new rules apply only to outright lifetime transfers from IRA plans; not to testamentary (planned) gifts. (Thus, the exclusion does not apply to charitable gift annuities or to any other split interest type of gift.)
• The IRA charitable rollover provision will only apply to transfers made during years 2006 and 2007.
• The provision excludes distributions to donor advised finds and supporting organizations.
• To qualify for the exclusion, distributions must be made directly to a designated charity by the plan (not to a charity via a distribution to the plan owner/donor).
• A gift receipt is specifically required by the Treasury for a donor to substantiate a charitable IRA distribution. A donor should be strongly encouraged to notify you that a gift from his/her IRA is on the way.