The United States Congress passed the Pension Protection Act of 2006 that includes a provision that provides new opportunities for donors to make tax-free charitable gifts from IRA funds.  The new federal legislation, enacted in August of 2006, allows those age 70½ or older to make tax-free gifts to charitable organizations such as MMI Preparatory School in any amount up to $100,000 a year from a traditional or Roth IRA without incurring income tax on the withdrawal.

This is good news for people who take mandatory minimum withdrawals from their IRA but may not need the additional income and wish to support a charitable organization. The provision is effective for tax years 2006 and 2007 only. The following limitations apply:

• The individual for whose benefit the plan is maintained must have attained the age of 70½ or older at the time of gift.
• Qualified charitable distributions may not exceed a total of $100,000 in any taxable year.
• The provision applies to tax years 2006 and 2007 only. Qualified distributions must be made by December 31 of each year.
• Qualified distributions must be made directly to the charity by the plan trustee. Contact your plan trustee for information on how to initiate a transfer.
• Qualified charitable distributions are excluded from gross income for Federal Income tax purposes. However, no federal income tax deduction is available. Certain states may not exclude gift amounts withdrawn from an IRA for state income tax purposes.
• Only outright gifts are eligible. Distributions to charitable gift annuities, charitable remainder trusts, pooled income funds and other split-interest arrangements do not qualify for special tax treatment.
• Gifts from retirement accounts other than IRAs—such as 401k, 403b, and SEP accounts—are not eligible.
• Distributions to Supporting Organizations as described in IRC 503(a)(3) and Donor Advised Funds as described in IRC 4966(d)(2) are specifically excluded. 

For more information, please contact Jim Bebla, MMI’s Director of Development and Alumni Relations, at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   or 570-636-1108, extension 113.