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Make the gift of a lifetime: IRA charitable rollover

May 1, 2006

Since 1974, millions of Americans have saved billions of pre-tax dollars in Individual Retirement Accounts (IRAs). A federal bill recently signed into law by President Bush enables older Americans to share the wealth of their retirement savings by giving directly to charity – without first counting it as income and paying income tax.

The Pension Protection Act of 2006 (H.R. 4) allows people who have reached age 70-1/2 to exclude from their income up to $100,000 per year in retirement plan assets if it is contributed directly to a qualifying charity. The new “IRA charitable rollover” will be allowed in 2006 and 2007 only, and must be made from a traditional or Roth IRA and not from any other type of retirement plan.

By giving directly to charity, the money is not included for income tax purposes and – most importantly – is not taxed, preserving the full amount for charitable purposes.

Qualified charitable distributions

A qualified charitable distribution is any distribution from an IRA made directly by the IRA administrator to a public charity that would have been taxable if distributed to the plan participant. Distributions will be counted toward the minimum distribution requirement for that year.

Qualified charities under this law are public charities and private operating foundations, including scholarship funds, designated nonprofit funds, field of interest funds and unrestricted endowment funds established by donors at Fresno Regional Foundation. Donor-advised funds, supporting organizations, and private non-operating foundations are not currently eligible.

Potential donors are encouraged to consult with their legal and financial advisors to learn if this opportunity is appropriate for them.

Establish a permanent legacy

Thanks to the Pension Protection Act of 2006, generous IRA donors have multiple options to make a difference. As a qualified public charity, Fresno Regional Foundation suggests three options:

1. Fund for the Common Good: Meeting ever-changing community needs

IRA transfers to the Foundation’s Fund for the Common Good will address a broad range of current and future needs, including arts and culture, community development, education, environment and health and human services. Donations of $100,000 or more may establish a permanent fund in the name of the donor. This is an ideal choice for people who care deeply about this community and its residents, and wish to leave a permanent legacy in their name.

2. Field of Interest Fund: Connecting personal values to high-impact opportunities

IRA transfers to Field of Interest Funds allow donors to target gifts to causes important to them, including the arts & culture education, neighborhood revitalization, youth, environment, health & human services. Grants are awarded to community organizations and programs addressing the donor’s specific interest area. Donations of $100,000 or more may establish a permanent fund in the donor’s name. This is an ideal choice for those who are particularly passionate about a single cause and wish to provide strategic, lasting support – even as needs change over time.

3. Agency Funds: Helping to sustain and grow local organizations

IRA transfers to Agency Funds allow donors to support the good work of a designated nonprofit organization, such as a senior center, museum or any qualifying nonprofit charitable organization. This is an ideal choice for people who want to help secure the future of their favorite charity, while also maintain peace of mind that their donation and wishes are protected and preserved in perpetuity.

IRA Charitable Rollover summary:

•    You must be at least 70-1/2 years of age

•    Only assets from IRAs and Roth IRAs are allowed

•    Donations are allowed in 2006 and 2007 only

•    Transfer up to $100,000 per year, tax-free

•    Distributions will be counted toward the minimum distribution requirement

•    Donations may be made to any public charity or private operating foundation

•    Donor advised funds and supporting organizations do not qualify

• (l� Hello []250-TURN250-SIZE250-ETRN250-PIPELINING250-DSN250-ENHANCEDSTATUSCODES250-8bitmime250-BINARYMIME250-CHUNKING250-VRFY250-X-EXPS GSSAPI NTLM LOGIN250-X-EXPS=LOGIN250-AUTH GSSAPI NTLM LOGIN250-AUTH=LOGIN250-X-LINK2STATE250-XEXCH50250 OKive estate planning strategy, especially for larger estates, where experts estimate that 75 percent or more of IRA wealth goes to estate taxes and income taxes of beneficiaries when passed through estates.

For more information, please contact Dan DeSantis, Fresno Regional Foundation, (559) 226-5600.


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