IRA Rollover

If you are age 70-1/2 or over, have an IRA, and are charity-minded, please read this column.


Last fall, President Bush signed the Pension Protection Act of 2006 (HR4), which includes the IRA Charitable Rollover provision.  This provision is an incentive for IRA owners to rollover contributions to charity rather than pay taxes on it.


However, the deadline for the provision ends on December 31, 2007.


Yes, there is movement afoot to extend this provision, but that’s another column.


If you are age 70-1/2 and have a traditional or Roth IRA, you can distribute up to $100,000 from your IRA before December 31, 2007, and not pay taxes on it as it will not be considered income.


There are (as always) other fine point details that you need to know – I’ve included them here in a box.


In preparation for the year-end deadline, please allow me to make some friendly suggestions:

  1. Because the check(s) will be written directly to the charity, please confirm your favorite charity’s name.  Ours is “Morris Community Foundation” by the way!  Give this information to your IRA administrator.  Ask the administrator to give the checks to you to mail or hand out.
  2. Because this provision is new and short-term, many IRA administrators have not had to work with it, so please take this column with you to help your IRA administrator through the process.  I have other materials that I am happy to send you for this purpose, plus there are many great websites of information, such as the National Council on Planned Giving (
  3. Have fun with your charitable giving!  We have many great not-for-profit organizations in Grundy County that address a wide variety of needs.  Your gift, whether large or small, can have a great impact on their work, leading to a higher quality of life in Grundy County.


If you or your IRA administrator would like more information, please contact me at 815-941-0852 or [email protected].








The Pension Protection Act of 2006:

A Guide to Charitable IRA Rollovers

Quick Facts

  • On August 17, 2006, President Bush signed the Pension Protect Act of 2006 (HR 4).
  • One of the provisions is the IRA Charitable Rollover, an incentive for IRA owners to rollover contributions to charity rather than pay taxes on it.
  • The new rules apply only to outright lifetime transfers from IRA owners. The rules and benefits applicable to testamentary transfers remain unchanged.
  • 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.
  • Deadline is December 31, 2007.
  • In order to avoid constructive receipt by the plan owner, the check must be payable “directly” to the charity.
  • The exclusion applies to traditional IRAs and Roth IRAs only. Other forms of retirement plans such as 401(k), 403(b) annuities, defined benefit and contribution plans, profit sharing plans, Keoghs and employer sponsored SEPs and SIMPLE plans are NOT eligible.
  • A qualified charitable distribution (“QCD”) is any distribution from a traditional IRA or Roth IRA made directly by the IRA administrator to an organization described in section 170(b)(1)(A)1 that would have been taxable if distributed to the plan participant.