Updated for the Emergency Economic Stimulus Act (EESA) of 2008 on Nov. 21, 2008

Extended by the Heart Act through December 2009.

The Charitbale Donation from an IRA to a qualified charitable organization provision of PPA has been extended by EESA until the end of 2009.

Expiring Soon: Charitable Donations from an IRA
Rev. 08/23/07, E-mail Alert 2007-24

Pension Protection Act Section 1201 permits an IRA owner who is age 70½ or older to make a direct, tax-free donation of up to $100,000 per year from his or her IRA to a qualified charitable organization during the 2006 and 2007 tax years. This option expires December 31, 2007.

The Pension Protection Act Section 1201
The Joint Committee Report has a full explanation on pages 263-269

Can an individual over the age of 70½ who has a qualified plan balance and no IRA, roll over the entire balance into an IRA and make a charitable donation of $100,000 without having to take an RMD from the qualified plan?
Rev. 12/29/06, E-mail Alert 2006-24

Under PPA, an IRA owner who is 70½ or older may make a direct, tax-free donation to a qualified charitable organization of up to $100,000 per year from his or her IRA with respect to tax years 2006 and 2007. An advantage to this option is that such distributions may be used to satisfy the IRA’s minimum distribution requirements.

Eligible IRA owners may take advantage of this provision, regardless of whether they itemize their deductions. To qualify, the IRA funds must be contributed directly by the IRA trustee to the eligible charity. Although the amounts so transferred are not taxable, the individual may not take a deduction for the amount so transferred.

MHC Caution: Not all charities are eligible recipients. For example, donor-advised funds and supporting organizations are ineligible recipients and such distributions remain fully taxable to the IRA owner.

Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans are not eligible for this treatment. Further, an individual required to take a minimum distribution from a qualified plan may not roll that amount over to an IRA to take advantage of this provision. However, any amount distributed in excess of the minimum required distribution taken from the qualified plan may be rolled over into an IRA and the charitable donation could then be made from the IRA.

Individuals interested in making such contributions for 2006 and 2007 are strongly urged to consult with their personal tax advisor.
Warning: The distribution from the IRA must actually be made in 2006 to count for this year. Amounts donated in 2007 may not count for 2006.

IRS Instructions for Form 1099-R Reporting of Qualified Charitable Distributions:
"Section 1201 of the Pension Protection Act of 2006 allows certain account holders to direct a tax-free distribution to a qualified charity from a traditional IRA or Roth IRA. However, the trustee is not responsible for knowing if that charity is one described under section 408(d)(8) of the Internal Revenue Code. Therefore, follow the general rules for reporting distributions where the recipient is age 70 ½ or older. Enter code 7 in box 7 of Form 1099-R for these distributions. Do not use code F."

MHCO webpage for other PPA information and articles

Bill Grossman, QPA