Congress has recently taken important steps to strengthen America's retirement system while also encouraging additional charitable giving.  The new Pension Protection Act that President Bush signed into law on August 17, 2006, may offer you new opportunities for tax-free United Way giving.  If you are

·        70 ½ years of age or older,

·        own an IRA, and

·        regularly make charitable contributions,

the new legislation offers special incentives. 

For 2006 and 2007, Congress is allowing individuals with traditional or Roth IRAs to make tax-free gifts directly to United Way without claiming any increased income or paying any additional tax.  These tax-free rollover gifts could be $1,000, $10,000 or any amount up to $100,000 each year.  A couple with separate IRAs could each give up to that amount. 

Previously, if you wanted to use IRA funds for a charitable contribution, you had to withdraw money from your IRA and then contribute it.  The amount you withdrew was taxable, and the deduction for the contribution may or may not have offset the tax. 

Another benefit of the new legislation is that the funds transferred from your IRA to a charity count toward your mandatory withdrawal.

For a gift to qualify, the distribution must be made directly from the Trustee of your IRA to United Way.  You will need to check with your IRA Trustee or your advisor if you self-direct your fund, for details on how to distribute the gift.

To enjoy the full benefit of this two-year opportunity, transfers must be completed prior to December 31 of each year. 

If you are over the age of 59 ½, funds may not be distributed directly to United Way but can be withdrawn from IRAs and other retirement accounts and then donated to charity without payments of a 10% penalty for early withdrawal.

While amounts withdrawn and donated in this way are reported as part of your income, they can then be deductible as charitable contributions, which generally results in a "wash" for federal income tax purposes. 

For a complementary brochure outlining the benefits of giving from an IRA call 954-7210.  For examples of various giving scenarios, Click here. It is recommended that you contact your CPA or tax advisor to see how the new legislation might affect your own situation.  As always, United Way will be pleased to assist you in any way possible.