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New IRA Rules Help You Duck Taxes

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There is a window of opportunity for people who are age 70½ or older that allows them to make a gift of up to $100,000 to Ducks Unlimited from their individual retirement account (IRA). The result is more wetlands for ducks and fewer taxes for you.

The Pension Protection Act of 2006, signed by President Bush in August, provides this exciting, new tax-smart charitable gift. The new “IRA rollover gift” is an option in 2006 and 2007 only and can reduce the amount of your taxable income as a result of taking your IRA’s minimum distribution, or more, and giving it to charity. Some people must take a minimum 5 percent distribution from their IRA. If you’re one of these people, you can now direct this distribution to Ducks Unlimited without incurring any additional income or the taxes that go along with it.

You can make an IRA rollover gift by contacting your IRA custodian and instructing them to designate DU as the recipient of your minimum distribution amount or any amount up to $100,000. The charitable rollover gift is treated just like a charitable gift, because the amount you choose is not included as part of your annual taxable income. This effectively provides the equivalent of a 100 percent income tax charitable deduction for the gift.

Example
John Doe is 71 and has a traditional IRA with a balance of $100,000 consisting of deductible contributions and earnings. John has no other IRA.

John can request his IRA custodian to distribute up to the entire $100,000 to Ducks Unlimited. The old law would have taxed the whole gift as part of John’s annual income. But the new law allows the distribution of the money up to $100,000 as a qualified charitable contribution. As a result, it’s not counted as part of John’s income, and it’s a completely tax-free gift.

The new “IRA rollover gift” is a great way for you to duck taxes and help the ducks all at the same time.


Questions?  Contact Jon Rich for more information.

Phone
: 901-758-3763

Click here for more information on Tax-Smart Opportunities!
 (pdf)

Transfer Instructions for an IRA Charitable Rollover (pdf)


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