Stewardship Mission Moment
Attention: Members 70 1/2 and Over
The Stewardship season is upon us. This is the first in a series of articles.
The Pension Protection Act of 2006 (PPA) contains a provision worth considering if you are at least 70 ½ years of age and are required to make withdrawals from your IRA account(s). The provision is particularly valuable to those who are subject to the alternative minimum tax as a result of distributions they are required to take from their IRA(s). The PPA provides that for the tax years 2006 and 2007, you will be able to exclude from your gross income otherwise taxable distributions from a traditional or Roth IRA that are qualified charitable distributions. A qualified charitable distribution must be made directly by the IRA trustee to a qualifying organization. Orchard Ridge United Church of Christ is a “qualifying organization.†You must advise the trustee of your IRA account to send the contribution directly to the charitable organization to which you wish to donate, for example, Orchard Ridge UCC. The contribution is not counted as part of your income. However, it can not be counted as a charitable donation if you itemize deductions when you compute your income tax. (Contributions to a donor-advised entity or to certain private foundations will not qualify for this treatment. Thus, it probably is not available for church officers or members of the Leadership Team.)
Contributions made under this provision count as part of the required minimum distribution but they do not count as part of the donor’s income, thus reducing the donor’s taxable income. If a person has both a standard IRA and a Roth IRA, the charitable distribution should be taken from the standard IRA, as the Roth IRA distributions are not taxable. For persons who do not itemize their deductions, this provision has the effect of allowing them to make a charitable contribution while still taking the full standard deduction. This can be particularly valuable for persons who itemize every other year, taking the standard deduction in the alternate years. Members who might benefit from these provisions should contact their tax advisor or IRA trustee for more information.
