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November 2006
TAX-FREE DISTRIBUTIONS FROM IRAs!
Considering giving all or a portion of your IRA to charity?
The new law permits people 70 ½ and older to make direct transfers of IRA assets to qualified public charities without paying income tax on the withdrawals. (Donors are able to exclude the charitable IRA rollover from their taxable income, and are therefore not permitted also to take a deduction for a charitable contribution.) Even though this transfer is not included in taxable income, it is taken into account in determining the owner’s required minimum distribution for the year. This provision expires at the end of 2007 and is relatively narrow in scope:
- Donors must be already required to take annual IRA distributions (those over age 70 ½).
- Annual distributions eligible for charitable IRA rollover limited to $100,000.
- Eligible recipient charities generally include all public charities, but the statue expressly excludes donor-advised funds and supporting organizations from the group of qualified public charities eligible to receive charitable IRA rollovers.
California does not conform to this provision. Since this new provision in the law is relatively narrow in scope and California does not conform, it is important that you contact our tax department to determine eligibility and the state tax implications.
Please contact our tax department for any questions you may have.
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