New IRA Charitable Rollovers - Fact Sheet

Here's a brand new way to make difference at James Madison University: You can make a gift to Madison directly from your IRA. This opportunity will be available for just this year and next year. And, for this year, you'll need to act by December 31st.

Here's how it works: If you're required this year to take a minimum withdrawal from your IRA (or Roth IRA) - and you don't need the additional income, then you can do something very special for JMU by making a tax-free gift that satisfies your minimum distribution requirement.

Everyone 70_ years old and older with IRAs must take minimum distributions each year - and, these distributions are taxed as income. But, this year, a distribution directly to Madison is not taxed at all - thanks to the Pension Protection Act of 2006 signed into law in August.

You can take advantage of this new law in 2006 and again in 2007 to make tax-free charitable gifts directly from your IRA - a terrific way to make a larger gift to Madison this year that likely will cost you less than smaller gifts in prior years.

There are, of course, a few rules.

First, you'll only be able to do this for two year - 2006 and 2007. For this year, that means you must make the distribution by December 31st. For next year, you can make the distribution anytime between January 2nd - December 31st.

Second, these gifts can be for any amount, up to $100,000. And, a couple with individual accounts could each tap their own account - doubling to $200,000 the possible gifts you can make.

If you're likely to reach the 50 percent of AGI (Adjusted Gross Income) limit on charitable deductions, this IRA charitable rollover could allow you to make an extra $100,000 in charitable gifts this year. Also, if you're not an itemizer, you don't have to itemize your tax return to take advantage of the IRA charitable rollover opportunity.

This is a first-ever chance to use your IRA for outright charitable gifts in your lifetime. This new law offers a good time to remember that IRA funds also are an ideal source of charitable gifts later - because any funds remaining in an IRA following your death are subject to both income and estate taxes. So, if a family member (or friend) is an IRA beneficiary, taxes will reduce the amount significantly. But, if Madison is the beneficiary, the IRA's full amount passes to the University - and, the transfer creates a charitable deduction on your final tax returns.

If you're interesting in talking about ways to use your IRA this year for a charitable gift, please contact Ted Sudol, J.D., Madison's director of gift planning at 540.568.1776 or by e-mail at sudoltj@jmu.edu - and, before you make a gift from your IRA to Madison, please contact your professional advisor to be sure this is right for you.