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I was wondering if anyone could give a good summary of the new law regarding donating IRAs to non-profits, or direct me to somewhere that has the information.

Also, does anyone know the best way to transfer the assets? Would I request a distribution check made in the charities name, do a wire transfer to the charities bank account, or another option I'm not thinking of?

Thanks!
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The IRA fund manager needs to make the transfer and the owner of the IRA must be over 70 1/2.

Debra
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The IRA fund manager needs to make the transfer and the owner of the IRA must be over 70 1/2.

The complete list of rules for a Distribution from an IRA to a Charity is:

1. Taxpayer must be at least 70 1/2
2. Annual limit is $100,000, anything more is added to taxpayer's tax return.
3. It only applies to traditional IRA's & ROTH IRA's, not SIMPLEs or SEPs
4. It only applies to 2006 & 2007
5. Distribution goes directly to the charitable organization, NOT to the taxpayer and then to the organization.
6. The distribution is not taxable to the taxpayer (nor a deduction on Sch A)
7. The contribution is not deductible to the extent the distribution would have been taxable. The amount that would have been taxable is NOT computed like the Form 8606. Instead the taxable amount is computed in the same manner as an annuity which has made a nonannuity payment - income is deemed distributed first.
8. The charity must be a 50% charity. (Wipes out the private foundation) Can't be to a CRT.
9. Taxpayer cannot receive anything in exchange for the contribution(no dinners, etc). Receiving anything disqualifies the entire distribution and makes it taxable to the taxpayer with a subsequent charitable deduction.
10 The contribution is considered part of the taxpayers RMD, thereby reducing the amount the taxpayer must receive and pay taxes on.

The beauty of this is that if the taxpayer is unable to benefit from itemizing the charitible contribution, he gets to make the donation without ever paying tax on the amount he gives to the charity.
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Also, does anyone know the best way to transfer the assets?

Assuming things are similar to donating appreciated stock...

Talk to the charity and see if they have a policy for this.

Then, talk to the IRA custodian and ask for the proper form. You'll have to fill some of it out and then send it to the appropriate person at the charity.
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7. The contribution is not deductible to the extent the distribution would have been taxable. The amount that would have been taxable is NOT computed like the Form 8606. Instead the taxable amount is computed in the same manner as an annuity which has made a nonannuity payment - income is deemed distributed first.

This answers an unasked question.

Thank you,
Debra

You did respond to my post and not the original post. The only difference it makes is that the reply shows up under the replies to my posts and not for the person posting the question.
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The IRA fund manager needs to make the transfer and the owner of the IRA must be over 70 1/2.

The complete list of rules for a Distribution from an IRA to a Charity is:

1. Taxpayer must be at least 70 1/2
2. Annual limit is $100,000, anything more is added to taxpayer's tax return.
3. It only applies to traditional IRA's & ROTH IRA's, not SIMPLEs or SEPs
4. It only applies to 2006 & 2007
5. Distribution goes directly to the charitable organization, NOT to the taxpayer and then to the organization.
6. The distribution is not taxable to the taxpayer (nor a deduction on Sch A)
7. The contribution is not deductible to the extent the distribution would have been taxable. The amount that would have been taxable is NOT computed like the Form 8606. Instead the taxable amount is computed in the same manner as an annuity which has made a nonannuity payment - income is deemed distributed first.
8. The charity must be a 50% charity. (Wipes out the private foundation) Can't be to a CRT.
9. Taxpayer cannot receive anything in exchange for the contribution(no dinners, etc). Receiving anything disqualifies the entire distribution and makes it taxable to the taxpayer with a subsequent charitable deduction.
10 The contribution is considered part of the taxpayers RMD, thereby reducing the amount the taxpayer must receive and pay taxes on.

The beauty of this is that if the taxpayer is unable to benefit from itemizing the charitible contribution, he gets to make the donation without ever paying tax on the amount he gives to the charity.


New Jersey residents should note that the NJ Division of Taxation has announced that it will not follow federal law in this matter and that these IRA distributions will still be considered income for NJ GIT purposes.

http://www.state.nj.us/treasury/taxation/noticegit.htm

Ira
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Hi, acm4tax
I had heard of this new feature of the RMD and had thought that it might do us some good.
So I came to this board to find out more.
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I found your 10-item post fairly quickly and it answered my questions.
So I want to thank you.
But I see no beauty in it at all.
On the contrary, I do not feel encouraged to make use of this awkward offering of our Congress.
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