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06483 September 25, 2006
New law makes possible tax-free gifts from IRAs
Presbyterian Foundation encourages those 70+ to take advantage
by Toya Richards Hill
LOUISVILLE * A new federal law giving investors more flexibility with their individual retirement accounts has the Presbyterian Foundation hopeful more contributions will flow in to advance the denomination's mission.
The Pension Protection Act of 2006, signed into law Aug. 17, allows Individual Retirement Account (IRA) owners age 70 ½ and older to make direct gifts to public charities from IRA accounts without reporting the gift as income. Up to $100,000 can be given in 2006 and 2007.
IRA holders age 70 ½ and older are required by the Internal Revenue Service each year to withdraw at least a minimum amount * a Required Minimum Distribution * from their retirement accounts.
Historically, if you had an IRA you could only withdraw it, pay taxes and then make a gift, said Mark Klemm, senior vice president of development for the Presbyterian Foundation. Now, "you can give money directly out of your IRA and it won't be taxed. It acts as if you never earned the money."
What the new law means for the Foundation, and for the scores of other charitable organizations out there including individual PC(USA) congregation, is the potential to yield considerably more donations by the time the law expires on Dec. 31, 2007.
"The potential is huge," Klemm said. "That enhances the Foundation's ability to support mission."
Of the nearly 7,000 permanently endowed funds the Foundation holds, more than 80 percent of the beneficiaries are local churches and/or their missions.
The Foundation raised a little more than $36 million last year and is "on track" to reach this year's goal of $50 million, Klemm said.
Federal Reserve surveys indicate $3 trillion exists in IRAs, and IRA balances for people over age 70 are several hundred billion dollars.
Demographically, the new law is "very favorable for Presbyterians. Most Presbyterians are usually at the higher end of the income scale," Klemm said.
He said the Foundation is the best vehicle for giving particularly for those who want to restrict their giving. "We can help them work though what is the best vehicle and venue. * No one has done it longer than we have," which is nearly 200 years.
Klemm said the Foundation is sending out information about the new law to as many individual Presbyterians as it can, and that an email was sent to all executive presbyters encouraging them to pass on information to their churches.
"I would encourage everyone to do this," Klemm said.
For questions about the new law and how to give to the Foundation, call Pat Ohlmann, assistant vice president for gift planning, at (800) 858-6127, ext. 5957.
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