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• Do you want to make an outright gift to Oberlin?
• Are a lot of Your assets tied up in an IRA or ROTH IRA?
• Are you or will you be at least 70 ½ in 2006 or 2007?

If you answered "Yes" to all three questions, we have some good news for you. Congress recently passed the Pension Protection Act of 2006 which allows you to make an outright gift from your IRA to a qualified charity of up to $100,000 without paying any income tax on the withdrawal.

This opportunity is currently only available for 2006 and 2007. No charitable income tax deduction is allowed, because the funds transferred from your IRA are not subject to income tax upon withdrawal. You are allowed this tax-free rollover from an IRA or Roth IRA only.

Who is Eligible?
Donors who are at least 70 ½ years of age, who wish to make a gift from their IRA to a qualified charity.

Who Benefits from the Pension Protection Act's IRA Rollover Provision?

• Is the Required Minimum Distribution from your IRA amount to more income than you need? Consider transferring the remaining distribution to charity. Why? You can still meet your Minimum Distribution requirement by taking only the portion of the distribution you need for income, and then transferring the remainder of the distribution to the charity of your choice.
• Are you unable to itemize your deductions for income tax purposes? By taking advantage of the IRA rollover provision you can transfer money directly from your IRA to a charity with no income tax liability, thus eliminating the taxes you would otherwise pay.
• Are the bulk of you assets in an IRA? This is a great opportunity to use some of your hard earned money to make a charitable gift without incurring additional income tax.
• Have you made significant charitable gifts this year and run into the 50% of AGI ceiling? You can now transfer money directly to a qualified charity from your IRA, it isn't subject to this limitation and won't be taxed as a distribution.
• Further explanations of the Act's provisions can be found at the Planned Giving Design Center and PGCalc websites.

Examples

Do you take mandatory minimum withdrawal from your IRA but do not need all the additional income?

Example: In 2006, Yeo Ma's required minimum distribution from his IRA is $200,000, on which he would incur $70,000 in federal income tax in his 35% bracket. Joe has a comfortable standard of living because of investment income. He does not really need and wishes he did not have to take the taxable distribution from his IRA. Joe takes advantage of the new legislation and instructs his IRA administrator to transfer $100,000 (half) of his mandatory withdrawal to Oberlin.

How does this help Joe? He avoids $35,000 of income tax as a result of his gift.

Do you make charitable gifts equal to 50% or more of your adjust gross income?

Individuals who give up to 50% of their adjusted gross income (AGI), which is the current ceiling for charitable deductions in any year, can transfer up to $100,000 more from their IRA, which is not subject to this limitation or taxed as a distribution. This could enable taxpayers to avoid up to $35,000 ($100,000 x 35%) in federal income tax on IRA distributions for this and next year.

John O has an Adjusted Gross Income of $400,000 and he usually gives $200,000 to charity. This year he turned 70 ½ and must take his required minimum distribution of $100,000 which he also contributes to Oberlin. (See Below)

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