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New
Pension Law Provides for Charity
Check out
www.communityfoundations.net. Decatur, IL – Since 1974, millions of Americans have saved billions of pre-tax dollars in Individual Retirement Accounts (IRAs). Thanks to continued savings and investment returns, an estimated $3.6 trillion is currently invested in IRAs, and the total continues to grow. On August 17, 2006, a federal law was enacted allowing IRA owners to share the wealth of their retirement savings by giving directly to charity—without first counting it as income and paying income tax. The new law gives a new tax benefit to donors over 70 1/2 years old.“This is a wonderful change to help people make major gifts during their lifetimes to the nonprofit organizations they choose to support,” said Lucy Murphy, Executive Director of The Community Foundation of Decatur/Macon County. Thanks to decades of deliberate saving and favorable investment returns, a substantial share of today’s retirees have more money in their IRAs than they’ll ever need. Many have expressed an interest in giving the funds to charity, but income tax must be paid on all withdrawals, which sharply reduces the value of the gift. Others have asked about designating their children as beneficiaries, but that may draw additional tax consequences. “For large estates, much of the wealth in IRAs goes to estate taxes and income taxes of beneficiaries,” Murphy said. “Some estimate that heirs receive less than 25% of most IRA assets that pass through estates.” A provision in the new federal Pension Protection Act of 2006, signed by President Bush today, creates a new option: transferring IRA assets directly to charity. By going directly to charity, the money is not included in the IRA owner’s income and—most importantly—is not taxed, preserving the full amount for charitable purposes. The law covers all gifts made this year and next. In 2006 and 2007, holders of traditional and Roth IRAs who are at least 70 ½ years old can make direct charitable transfers up to $100,000 per year. As a qualified public charity, The Community Foundation of Decatur/Macon County can help donors execute the transfers and choose from several charitable fund options for their gift. Donor Advised Funds do not qualify for tax-free IRA transfers. “This really is a time-limited program: the window is open now, but it will close in 2007 unless Congress extends it,” said Murphy. “For anyone interested in establishing a permanent legacy in this community, this is the opportunity of a lifetime to make the gift of a lifetime.”
The Lee J. Robinson Award Fund
Established by family and
friends in memory and honor of Lee J. Robinson, this award
program helps young people ages 6 to
20 participate in school, sports, recreational, and arts activities.
The
Lee J. Robinson awards
enable recipients to buy equipment or musical instruments, attend
special camps, sign up for extracurricular classes and pursue creative
interests that might otherwise be out of reach.
Awards of $100 or more are
made to assist in the pursuit of these interests through sponsoring
entities such as schools, teams, or nonprofit organizations.
Organizations, coaches,
parents, and teachers may identify potential recipients and refer them
to The Community Foundation by completing a brief
application. Please contact The Community Foundation at 217-429-3000 for additional information or an application.
You can make donations to any of these funds held by The Community Foundation, or start a fund of your own.
Arts/Culture
Community Development
Education
Scholarships
Social Services
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