Gift Planning - Charitable Gifts via IRAs Now Possible

NEW LAW ALLOWS OPPORTUNITY FOR IRA CHARITABLE DISTRIBUTIONS.

From: Office of Charitable Gift Planning
August 16, 2006

President Bush signed into law today the Pension Protection Act of 2006. This new law contains several provisions designed to stimulate charitable giving in 2006 and 2007, including an opportunity for taxpayers to make qualified charitable gifts from their Individual Retirement Accounts (IRAs) to charitable organizations.

This year - and next year - a taxpayer may make a charitable distribution from an IRA to benefit James Madison University by directing funds held in a traditional IRA or Roth IRA to be transferred directly as a charitable gift. In prior years, doing so would have created additional taxable income that might have been offset by a charitable deduction. But, in 2006 and 2007, this distribution directly from the IRA to James Madison University is completely tax-free to the individual.

This may be a terrific opportunity to make a larger charitable gift this year (and next year) than would otherwise be possible. There are some limitations contained in the new law. Here's a summary of the details:

• Individuals must be 70 years old and older to take advantage of this opportunity.
• They may transfer up to $100,000 per year directly from an IRA to James Madison University.
• The charitable distribution counts toward the Minimum Distribution requirements for individuals 70 years old and older.
• These charitable distributions from an IRA may be made in addition to any other charitable giving you may have planned for 2006 and 2007.
• Couples with separate IRAs can each make charitable distributions - doubling the potential charitable gifts to $200,000 each year.
• You do not need to be an itemizer to take advantage of this opportunity. Individuals may make charitable distributions from their IRA without regard to whether they itemize their federal income tax returns.
• The IRA charitable distributions must be made by December 31st each year.

Please note - Since the funds in an Individual Retirement Account (IRA) were deductible from taxable income at the time the funds were deposited into the account, the distribution of a charitable gift to James Madison University cannot generate an additional tax deduction. However, because the distribution from the IRA to James Madison University avoids the taxation that ordinarily would occur, such gifts are ideal strategies for both taxpayers who don't itemize their deductions and taxpayers who will reach the 50 percent of Adjusted Gross Income (AGI) limit on charitable deductions.

For more information about IRA Charitable Gift Distribution opportunities, please contact Ted Sudol, director of gift planning at James Madison University, at 540.820.0246 or sudoltj@jmu.edu. Toll-free - 540.296.6162.