IRA Contribution to charity

[fliszt]

I understand clients 70-1/2 or older may make direct contributions from their IRA to a charitible organization in 2006 and 2007 upon which there will be no taxes imposed on that gift. I can't find information that says if the contribution would count as a RMD or not. Any help to point me in the correct direction for info?
Thanks.

[solomon]

It does count toward RMD and also other charitable deductions on Sch A are not limited by it.

http://www.house.gov/jct/

[fliszt]

Thank you solomon

I appreciate your assistance.
Larry

[fliszt]

solomon

Solomon, where may I find the information on the IRA? Client called back and said she already rec'd RMD and "told" me she can send a check to charity for that exact dollar amount and still not be limited on sched A. Gee, I hate it when my clients know more about my business than I do.
Larry

[solomon]

Link

Click on link I cited and then click on the Joint Committee report - Technical Explanation. It is about 386 pages and the IRA information is towards the bottom - along with the new rules on non-cash contributions.

[Unregistered]

Larry M

It does not appear your client is correct - she has already received the funds. The language in the bill requires a direct transfer from the trustee to the charity. Caps added for emphasis. Any "wiggle" room here- doesn't seem so????

Part of §1201 of the pension bill

`(B) QUALIFIED CHARITABLE DISTRIBUTION- For purposes of this paragraph, the term `qualified charitable distribution' means any distribution from an individual retirement plan (other than a plan described in subsection (k) or (p))--

`(i) which is made DIRECTLY BY THE TRUSTEE to an organization described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3) or any fund or account described in section 4966(d)(2)), and

`(ii) which is made on or after the date that the individual for whose benefit the plan is maintained has attained age 70 1/2 .

New York Enrolled Agent

[fliszt]

solomon/New York EA

Thanks again to you both! Solomon, I was just reading that bill - something like page 38x or what ever. Yuck! how on earth can you digest that?
I will call my client back and tell her that we believe the bill prohibits the tp from receiving the funds and then writing a personal check to the charitable organization.
Thanks again especially for not making me read through that bill.
Larry
LamDrDD@USFamily.net

[Roland Slugg]

Uhhh ... better wait until ....

.... this bill is passed by the Senate, a compromise version is agreed upon by the H&S Joint Committee, the revised bill is passed by both H&S, and it's signed by the President. It isn't even close to law yet.

Many parts of H.R. 5970 were originally included in a bill earlier this year, then almost everything was stripped out in Committee, and one of the few provisions to survive was the one-year extension and increase in exemption amounts of the AMT.

Correction: The provision allowing direct contributions from IRSs to charities is part of H.R. 4, which was signed into law. See follow-up post below.

[Unregistered]

Bush

I thought the President signed into law the Pension Protection Act a few weeks ago.

[Roland Slugg]

Oops ... sorry 'bout that!

You're right. The "Pension Protection Act of 2006" was signed into law, and it does contain the provision under discussion. Somehow I got H.R. 5970 into my head ... don't know how. I apologize for the error in my earlier post.

FWIW H.R. 5970 (usually referred to by the media as the Minimum Wage Increase bill) is starting its long road through congress, and it may bear watching.