Contributions from IRAs

Added 08/08/07

 

If you are 70.5 years old in 2006 or 2007, and own an IRA, you may make a direct contribution from your IRA to a charity. Here are the rules:

  1. Must be 70.5 year old at the time of the donation

  1. Contribution must be made directly from your IRA to the charity

  1. The charity must acknowledge the contribution

  1. The total donated may not exceed $100,000 for all IRA’s combined.

  1. The contribution is not deductible on Schedule A

  1. The contribution is considered part of the required distribution that the participant must take each year.

  1. This is only available in 2006 and 2007.

The advantages are:

  1. The distribution does not increase the AGI of the taxpayer. Items such as reduced schedule A deductions and reduced dependency allowances will not be affected by the direct contribution from the IRA.

  1. The amount in the IRA is reduced without increasing taxable income

Since this provision was part of the August, 2006 pension act, there are currently no rules (as if October, 2006) from the IRS as to how these transactions are to be handled by the IRA trustee.

 

If you are considering contributing from your IRA, contact the charity and your IRA trustee for additional information.