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Congress Provides IRA Tax Relief

on Thu, 08/09/2007 - 08:00

The U.S. Congress enacted a law late last year that allows tax-free rollovers of IRA funds to nonprofit organizations, such as the WVU Foundation. You can take advantage of this opportunity to support West Virginia University.

To qualify for the benefits of the Pension Protection Act of 2006, which authorizes gifts from IRAs that will avoid federal income taxes, :
 
You must be age 70½ or older when the gift is made
 Transfer has to go directly from the IRA to charity during 2007
 IRA gift(s) cannot exceed $100,000 per taxpayer for 2007
 Gift(s) must be outright (Gifts for charitable trusts or gift annuities do not qualify)
 
Using IRA funds for a gift is beneficial because the distribution is not reportable on your federal income tax return. Only IRA funds qualify, not other types of retirement accounts. Although there is no income tax charitable deduction from making a gift this way, not having to report the income is the equivalent of receiving a deduction and is even better for those who do not generally itemize their deductions. In other years, non-itemizers lost the benefit of their gifts, but making tax-free rollover gifts also results in having lower amounts of taxable income.

In many states, the gift amount will not be reportable income (because it will not be included in your federal adjusted gross income), doubling the overall tax benefits for you.

The gift does count toward your required minimum distribution amount as well and does not impact or lessen the deductibility of other charitable gifts that you make in 2007.

Consult your financial advisor about how well this tax-free IRA rollover can help you achieve your charitable goals and help WVU. We will be glad to provide assistance to you. Contact the Foundation at 800-847-3856 or e-mail wvuf@wvuf.org to receive the necessary information needed to complete the tax-free gift transfer process.

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