Fighting hunger with a gift of appreciated securities-stocks, bonds or mutual funds you’ve held for more than a year-is the same as giving cash. You enjoy the same deductions and pay no capital gains tax on the transfer. Chittenden Emergency Food Shelf gets the support we need to provide the best services to our community.
Please contact Rob Meehan at (802) 658-7939 ext. 22 or firstname.lastname@example.org
Frequently Asked Questions about the IRA Rollover – Pension Protection Act of 2006
1. What is the Pension Protection Act of 2006?
The Pension Protection Act of 2006 is a new law signed by President Bush in August 2006, which allows up to $100,000 of tax-free distributions per year from IRAs for charitable purposes.
2. Can I make a charitable donation with any of my retirement plans?
No. Under the Pension Protection Act of 2006, you may only make a charitable distribution from a traditional IRA or Roth IRA. Distributions from simple IRAs, 401(k)s, 403(b)s, as well as other retirement plans do not qualify. However, some of the non-eligible plans may allow you the opportunity to rollover those plans into an IRA qualified plan. You should consult with your plan administrator to determine if this option is available to you.
3. Can anyone make a charitable donation from their IRA qualified plan?
No. You must be at least 70½ years old by the date of the contribution to charity. This should not be confused with the rule that requires plan participants to begin receiving the required minimum distribution in the same year that they reach age 70½.
4. When does the Pension Protection Act of 2006 take effect?
The provision will be in effective from 2006 until December 2007 when it is set to expire. Charitable organizations across the country are hoping to get the law extended by Congress beyond the December 31, 2007 expiration date.
5. How do I make a charitable donation from my IRA qualified plan?
You must ask your IRA plan administrator to transfer funds directly to the charity of your choice. Check with your administrator or tax advisor for more information.
6. Can I direct my IRA donation to a charitable gift annuity or charitable remainder trust?
No. Neither of these charitable gift arrangements qualifies under this new law.
7. Can I direct my IRA donation to a donor advised fund?
No. A donor advised fund does not qualify under this new law.
8. Will I qualify for a charitable deduction by making an IRA donation from my qualified plan to the charity of my choice?
No. You do not receive a tax deduction for making a charitable distribution from your IRA qualified plan, but those funds are transferred to the charity of your choice free from taxes.
9. What are the advantages of making an IRA donation from my qualified plan to the charity of my choice?
The advantages will vary by donor. In general, this new law allows individuals who are 70½ or older to make tax-free gifts to the charities of their choice using funds that would otherwise be subject to tax under mandatory withdrawal rules. As always, we strongly recommend that you consult your own financial or tax advisor to determine what is best for your personal situation.
Note: This page provides general financial information, not to take the place of professional financial or legal advice. As with any tax strategy, please consult your professional tax advisor.