posted by admin on Sep 16
If you are over 70 1 / 2 years, you want to make a special gift for a charity project, but their only liquid asset is your IRA, I have good news for you.
On August 17, 2006, the Pension Protection Act of 2006 (PPA 2006) was signed into law. This piece of nearly 1,000 pages of legislation marked the most radical changes in the pension area in 30 years.
Let me give you two common examples that contain problems faced by older people settled DVP 2006 …
Roger and Claire are retired. Roger spent his career in the aerospace industry. It was more than offset by the few years and accumulated a large 401 (k). When he retired, he rolled his 401 (k) into an IRA. Other than their home, the IRA is by far his greatest asset.
For years, you Roger and Claire have been supporters of the Humane Society. Your local chapter is building a new wing in their kennels. Roger and Claire would love to make a significant donation “somewhere in the neighborhood of $ 50.000 to $ 100.000.
Bill and Diane both worked throughout his career. Mary taught? Through 6th grade for 40 years now. Bill was a career military officer. After his retirement, he spent 20 years working in the private sector. Like Roger, Bill has a large IRA.
When Bill turned 70 1 / 2, it was necessary to start taking minimum required every year or from distributions from your IRA. However, Bill and Diane do not need the income; your other sources of retirement income are more than sufficient. However, Bill should have these RMDs and pay income tax.
Bill and Diane have been active in his church all their married life. The church just bought a new organ. The church does not pay cash for the body, most of which was financed. Bill and Diane would like to pay the court.
Both Roger and Claire and Bill and Diane are warm people. But, before the adoption of the PPP in 2006, his generosity might have been frustrated by several things …
1. In both cases, its main asset was an IRA liquid. Neither boy had other assets from which to make a gift. Like Car Donations
2. If large amounts were withdrawn from their IRAs, which would be subject to ordinary income tax.
3. If one gives charity, the rules limiting the amount that could be deducted as a charitable contribution to be followed. This means they may have to pay taxes on a portion of your IRA withdrawals.
But thanks to the provisions of PPA 2006, Roger and Claire can make your Boat Donations or House Donations to the Humane Society and Bill and Diane can pay your church’s new organ with money from their IRAs and pay no tax on withdrawals. But they have to follow the rules…