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Submitted by: Amy Rose Herrick
Amy's skills combine Tax Planning, Income structuring, Cash Flow, Divorce Settlements, Debt configuration, Estate Plans, Portfolio Planning and Distribution Alternatives. She assisted an institutional investor base from '86-90, then focused her practice in '91 to the present for individuals and small business exclusively. Amy holds various professional licensing in several states. She has provided planning advice to multiple media outlets including Newsweek. Interviews are available.
The Pension Protection Act holds a special opportunity to a select group of IRA holders. You must be over age 70 and plan on gifting money to charity by 12/31/2007.
You are allowed to take distributions from your traditional IRA or Roth IRA’s up to $100,000 and donate the IRA proceeds to charity.
There is a catch, you cannot deduct the gift. You do not pay taxes on the distribution either. The charity receives the proceeds directly.
Of course, the natural account to use would be the otherwise taxable IRA.
To this author, it would make little income tax sense to gift your Roth IRA which would likely be non-taxable dollars to the recipient, but gifting the Roth IRA could in limited circumstances conceivably make some estate tax planning sense.
Consult with a qualified tax professional to determine if this is indeed an opportunity that would accomplish your charitable gifting goals effectively. Depending on your other taxable income structure, it may make more sense to liquidate the IRA and then hand the proceeds over to charity instead of a direct transfer.
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