Consider Gifts to IJ from IRAs

February 2007

Consider Gifts to IJ from IRAs

Example:

Joan, age 80, has an $800,000 IRA and wishes to fulfill her 2007 pledge commitment of $100,000 to the Institute for Justice.  Under the new law, she could instruct her IRA administrator to transfer this amount directly from her IRA to IJ.  Although Joan cannot claim a charitable contribution deduction for this gift, she will not have to report this $100,000 distribution as income on her federal taxes – a very helpful provision since she does not itemize and does not wish to increase the percentage of her Social Security income that is taxed.   Since Joan does not need the IRA income, she is happy that her gift to IJ will also fulfill her IRA minimum distribution requirement for 2007.

If Joan has a spouse age 70 1⁄2 or older, he can make a $100,000 gift from his IRA in 2007 as well.

By Melanie Tacoma

Last summer Congress passed a law that is good news for you and for the charities that you support.

Yes, you read that right.

The Pension Protection Act of 2006 permits traditional and Roth individual retirement account (IRA) owners, age 70 1⁄2 and older, to transfer up to $100,000 tax-free to charitable organizations like the Institute for Justice, allowing you to make a gift that reduces the value of one of your most tax-burdensome assets.

This provision, however, is effective only until December 31, 2007, so gifts can be made only until the end of this year.

A gift from your IRA provides you with the following benefits:

•You advance individual liberty by giving generous support to IJ.

•You fulfill part or all of your required minimum distributions from the account without increasing taxable income.

•You reduce your taxable estate (note that the distribution does not result in an up-front income tax deduction, however).

To make a current gift to IJ from your IRA, contact your IRA administrator.  IJ’s tax ID number is 52-1744337.

If a current gift does not work for you, another option is to name the Institute for Justice as a beneficiary of any of your tax-deferred accounts, including not only IRAs but also 401(k), 403(b) or SEP plans. Because of the tax consequences of leaving these accounts to non-spousal beneficiaries, these assets are particularly good candidates for charitable giving.  (For more information about how to best fit your giving to your individual situation, please consult your professional advisors.)

Any of these gifts qualify you for membership in IJ’s Four Pillars Society, which recognizes those who have made a commitment to preserving the freedoms they value for generations to come through their support for IJ.  For more information, please visit www.ij.org/donate/planned_gifts.html

Melanie Tacoma is coordinator of IJ’s Four Pillars Society.