The Charitable IRA Rollover

A Special Gift Opportunity for 2007

On August 17, 2006, President Bush signed the Pension Protection Act of 2006 into law. This act covers a broad range of pension and tax reforms, and includes significant and long awaited charitable tax law revisions. The “PPA” contains a charitable IRA rollover provision that allows donors who are age 70˝ or older to make a direct rollover to qualified charitable organizations, such as Marietta College, of up to $100,000 from their traditional or Roth IRA, for the remainder of the 2007 calendar years. A charitable IRA rollover directed to a qualified charity can count toward the donor’s required IRA distribution for 2007.

Since the PPA of 2006 was enacted in August 2006, the National Committee on Planned Giving (www.ncpg.org) has documented over 5,800 individual donors directing distributions totaling more than $102 million to their charities of choice including Marietta College. It is hopeful that Congress will support making permanent this charitable gift planning option for citizens through legislative support of the Public Good IRA Rollover Act of 2007.

Download a sample letter to direct your charitable IRA rollover to Marietta College (Word).

The charitable IRA rollover provision does not apply to other types of retirement plans, trusts, annuities or pooled income funds. A charitable IRA rollover should only be considered by individuals who are sure that they will not need these assets at a later date. A donor of any age can still make a tax-wise gift of an IRA or other retirement account by naming Marietta College as a beneficiary at their death.

There is no income tax deduction for the charitable IRA rollover, unless the rollover is made with documented taxable contributions, nor is any income realized by the donor. This scenario is more beneficial for most donors as compared to a taxable IRA distribution followed by a charitable deduction. The charitable IRA rollover negates the I.R.C. section 68 phase out of deductions and eliminates issues related to carryover of existing charitable deductions resulting in no self employment or Social Security taxes, and in most cases no state income tax applicable to the rollover.

The charitable IRA rollover should be directly transferred from the IRA plan administrator, custodian or trustee, to the charity. The donor should not accept any distribution of funds intended for a charitable IRA rollover. Note that custodians are also learning how to handle these gifts and any rollover should be directed well ahead of time in order to allow for unexpected delays.

Marietta College
Office of Gift Planning
215 Fifth Street
Marietta, OH 45750

740-376-4704 (b)
740-376-4509 (f)
800-274-4704 (toll-free)

giving@marietta.edu

Office of Gift Planning
Irvine Administration Building
8:30 a.m. - 5 p.m., Mon.-Fri.