Charitable IRA gifting opportunity

Updated 10:00 AM November 20, 2006

Charitable IRA gifting opportunity

The Pension Protection Act of 2006 signed into law Aug.17 provides a limited-time opportunity to make charitable contributions directly from individual retirement accounts (IRAs) to qualified charitable organizations between now and Dec. 31, 2007. Here are the basics:

• Individuals aged 70 1/2 and older may transfer up to $100,000 per year directly from an IRA to a qualified charity like U-M;

• Funds removed from the IRA for this purpose do not add to the giver's taxable income, therefore, taxes will not have to be paid on them;

• Because the funds are not taxable as income, they cannot also be claimed as a deduction;

• This withdrawal from an IRA may be applied toward the required minimum distribution; and

• Even if donors make other charitable gifts that fully utilize the allowable federal income tax charitable deduction (50 percent of adjusted gross income for cash gifts to public charities), they also can take advantage of the legislation.

Retired faculty and staff members who have TIAA-CREF or Fidelity accounts may roll a portion of their accounts into an IRA, and then make a gift to a favorite nonprofit organization from the IRA. Faculty and staff who are not retired may make such gifts if they hold savings incentive match plan for employees (SIMPLE) retirement account/supplemental accounts.

The legislation does include limitations. For example, qualified contributions may not be used to fund charitable remainder trusts or gift annuities. Consultation with a tax professional is advised for those contemplating a gift under the new law.

For additional information go to umich.plannedgifts.org/feature.html or contact the University's Gift Planning office at giving2@umich.edu or (866) 233-6661 toll-free.

Charitable IRA gifting opportunity

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