NEW TAX-WISE OPPORTUNITY FOR CONTRIBUTION OF IRA ASSETS
TO Twin Cities Public Television

A provision in the new pension reform legislation will make it easier for donors age 70½ or older to donate money from an Individual Retirement Account (IRA). This provision, which is effective only for 2006 and 2007, will allow individuals 70½ and older to make tax-free distributions from their IRAs directly to charity. The distribution is limited to $100,000 a year, and must come from an IRA, rather than a 401(k) or other retirement plan.

Ordinarily, when you withdraw money from your IRA, it becomes part of your taxable income for the year. Under the new provision, for a qualifying donor, an IRA withdrawal that is donated directly to charity is excluded from the donor's income, even for non-itemizers. Because there is no additional income to the donor, the withdrawal does not affect the phasing out of the personal exemption or increase taxes on Social Security benefits.

There is another benefit. The withdrawal counts against the donor's required minimum distribution for the year.

Make a lifetime gift

Under the new law, eligible donors may use funds from an IRA to make a lifetime charitable gift free of tax obligations. After this law expires, a donor would have to report any amount taken from an IRA as taxable income, then take a charitable deduction for the gift - but only up to 50% of the donor's adjusted gross income.  (Excess deductions may be spread over an additional five years.)

Fortunately, now these IRA gifts can be accomplished simply and without tax complications. Plus, if you can make the gift now, while you are living, you will be able to witness the benefits of your generosity.

Use your required minimum distribution to make a gift

If you live comfortably on your pension, savings and Social Security, you may not need your required IRA distributions. By directing these distributions directly to tpt to support our mission, qualifying donors avoid having to report additional income and separate charitable deductions, and may save on taxes.

To make an IRA gift, simply contact the trustee of your account, and ask that it make a qualified charitable distribution directly to tpton your behalf.

If you have any questions about how this new provision affects your personal situation, please contact your accountant or financial advisor.

For more information about how to make an IRA distribution to tpt, call Claudia Cackler, Director of Major Gifts for Twin Cities Public Television at 651-229-1460.