home › news ›

Good News for Generous Folks in the USA

A provision in Pension Reform legislation signed by President Bush this August, 2006, makes giving to 501®(3) organizations-say, like the ICUU-easier and much more satisfying.

Captivated by this possibility? Let us tell you how. The provision allows individuals who are 70 1/2 or older (kids need not apply) to take tax-free withdrawals from the IRAs as long as the money goes directly to charity.

In her weekly column in USA TODAY, Sandra Block gives the whole story. "Oridinarily when you withdraw money from your IRA, it becomes part of your taxable income for the year. If you donate the money to charity, you can deduct the contribution-but only if you itemize on your tax return. Many retirees who no longer pay a lot of mortgage interest don't have enough deductions to itemize"

Mark Joseph of Sentinel Wealth Management in Reston, VA is quoted in the article as saying that you not only avoid taxes on that donated amount, it counts toward your required minimum IRA distributions for the year.

According to Joseph, the rules are as follows:

  • The distribution must go directly to the charity. Your IRA administrator should send the check directly to the organization. If the check is made out to you, you will owe taxes on the withdrawal.
  • The maximum tax-free distribution you can make is $100,000 a year in 2006 and 2007.

To get the full story, email sblock@usatoday.com, or check usatoday.com.