If you're looking for the most tax-effective gift to make to our Foundation, then your individual retirement account (IRA) may very well be the best choice.
The Pension Protection Act of 2006 presents a new giving opportunity. The law allows individuals aged 701/2 or older to make gifts now to qualified charitable organizations like ours using funds transferred directly from their IRAs. Furthermore, these individuals will not have to pay taxes on the amounts transferred. You can transfer any amount you desire up to $100,000 on or before Dec. 31, 2007.
- The transfer counts toward your minimum required distribution as long as you have not yet received your 2007 distribution.
- The transfer generates neither taxable income nor a tax deduction, so you will receive the benefit even if you do not itemize your tax deductions.
- You can witness the difference your philanthropic dollars make to us.
John, aged 73, has $150,000 in an IRA. He made a pledge to give us $15,000 this year. He had the choice of giving cash or other assets to fulfill the pledge, but now he has another option. If he transfers $15,000 to us from his IRA on or before Dec. 31, 2007, he avoids paying income tax on $15,000. He will not, however, be able to use it as a charitable deduction—it is a pure wash. The Pension Protection Act gives him an easy and convenient way to benefit us without tax complication.
Another tax-smart strategy is to name our organization as beneficiary of all or a portion of your IRA assets. By naming us as beneficiary of your IRA, you can leave us a gift that is free of all income and estate taxes because we are a charitable organization.