The Pension Protection Act of 2006 and What It Means to You
The House of Representatives and
the Senate have both passed the Pension Protection Act of
2006 (H.R. 4, Public Law 109-280), a massive tax law aimed
at strengthening pension funds and providing a multitude of
other tax changes. The President
signed the bill
into law on August 17, 2006. Here's a summary of the major
tax law changes enacted in the Pension Protection Act.
Along with a cadre of issues
dealing with Pensions, Individual Retirement Accounts and
other related topics, the Pension Protection Act of 2006
allows taxpayers to donate money to charity directly from
their IRA account. The distributions will be tax-free and
avoid the penalty on early withdrawals. Taxpayers are
allowed to donate up to $100,000 per year from their IRA.
Since the distribution will not be included in taxable
income, individuals will not be able to claim a tax
deduction for the charitable contribution.
In a Nutshell
There have been many
permutations of charitable IRA rollover legislation floating
through Congress in recent years, so it is imperative that
gift planners, charities, and donors understand what the new
law permits and what it does not.
First, it is important to note
the new rules apply only to outright lifetime
transfers from IRA owners. The rules and benefits applicable
to testamentary transfers remain unchanged.
In a nutshell, the new law
provides an exclusion from gross income for otherwise
taxable IRA distributions of up to $100,000 per year from
traditional IRAs and Roth IRAs for "qualified charitable
distributions" made during 2006 and 2007 by plan owners who
have attained at least age 70½ on the date of distribution
to charity.
The balance of this article
will decipher this definition, answer some of the questions
for which we have answers, and offer our thoughts for those
we don't. For reference, refer to the
text of the charitable provisions of H.R. 4 and the
Joint Committee on Taxation's Explanation (both
available in
PDF format).
Read the entire article from
the Planned Giving Design Center
here.
(taken in part
from The
Planned Giving Design Center - www.pgdc.com)
For more information, please
contact the Fund Development Office at 704-334-3187, ext.
103 or
development@uptownshelter.org or talk to your Financial
Advisor.
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