Your IRA Can Help Optimize MCG's Mission
Last August, President Bush signed into law new tax incentives for charitable gifts. The Pension Protection Act now makes it even easier for donors age 70 and older to support education, health care and research at the Medical College of Georgia.
The law enables making a lifetime gift using Individual Retirement Account funds without undesirable tax effects. Previously, any amount taken from an IRA had to be reported as taxable. A charitable deduction was allowed, but only up to 50 percent of adjusted gross income.
Fortunately, these IRA gifts are now simple and free of tax complications. Plus, you can make a gift to MCG now—while you are living and able to witness the benefits of your generosity.
You may contribute funds this way if:
- You are age 70 and a half or older
- The gift is $100,000 or less each year
- You make the gift by Dec. 31, 2007
- You transfer funds directly from an IRA or rollover IRA to the MCG Foundation on behalf of the Medical College of Georgia
- You transfer the gift outright to MCG
Consider a couple of hypothetical examples:
- Pat, age 80, has $450,000 in an IRA and has pledged to give $100,000 this year. If Pat transfers $100,000 from the IRA, she can’t claim it as a charitable deduction but will avoid paying income tax on that amount. Pat has found an easy way to benefit charity without tax complications. If she desired, Pat could give more than $100,000. The legislation allows a maximum $100,000 gift in both 2006 and 2007, so Pat could give $100,000 each year. If her spouse has an IRA and is 70 and a half or older, he can also give up to $100,000 each year.
- Lawrence, age 72, lives comfortably on his pension, savings and Social Security. He is required to take minimum distributions from his IRA each year and pay taxes on those funds. This distribution subjects more of his Social Security income to tax. By directing a portion of his mandatory IRA withdrawal directly to charity, he does not have to report that amount as income and avoids having to pay taxes on those funds. He also prevents additional tax on his Social Security benefits.
For those age 59 to 70, IRA and other retirement funds can be donated to charity without a 10 percent penalty for early withdrawal. While amounts withdrawn and donated in this way are reported as part of your income, they can be deductible as charitable contributions, which generally results in a “wash” for federal income tax purposes. Check with your financial advisor for more details.
It is wise to consult tax professionals if you are contemplating a gift under the new law. And as always, don’t hesitate to contact me with any questions.
Sincerely,
Tony Duva
Associate Vice President
for Gift Giving
800-860-1113
aduva@mcg.edu
Options for Remembering MCG in Your Will
For more information, please contact Tony Duva at 800-869-1113 or aduva@mcg.edu.
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Information in this article is not intended as legal advice. For legal advice,
please consult an attorney.
Tax laws are subject to change.