Direct Contributions from IRA or Roth IRA to Qualified Charities
The Pension Protection Act of 2006 provides an exclusion from gross income for otherwise taxable IRA and Roth IRA distributions during 2006 and 2007 of up to $ 100,000 per year from traditional IRAs and Roth IRAs for a “qualified charitable distribution” made by an IRA or Roth IRA owner who has attained at least age 701/2 on the date of the distribution to a qualified charity. This change allows qualified taxpayers to donate money to a qualified charity directly from IRA and Roth IRA accounts. Qualifying distributions are tax free and are not subject to the penalty on early withdrawals. Since a qualifying distribution is not included in taxable income, individuals cannot claim a tax deduction for the charitable contribution.
The exclusion applies only to traditional IRAs and Roth IRAs and not to distributions from other 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. Owners of such ineligible plans might consider rolling amounts into an IRA to take advantage of the new rules.
ALWAYS CONSULT YOUR TAX ADVISOR.