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University of Iowa Foundation News Release

Aug. 21, 2006

UI Foundation Gift Planning Advisor Available To Comment On New Law

Last Thursday (Aug. 17), President Bush signed into law the Pension Protection Act of 2006. Under one provision of the law, individuals who are 70 1/2 years old or older can now make direct transfers (or "rollovers") of Individual Retirement Account (IRA) assets to qualified charities, without having to declare the transferred dollars as income, and without additional tax forms.

Previously, withdrawals from IRA's were subject to income taxes. That sometimes significantly reduced the value of the gift to a charitable organization. This new provision in the pension reform law covers all gifts made directly from an IRA to a qualified charity in 2006 and 2007. The maximum amount that can be transferred is $100,000 per year.

Susan Hagan, an executive director of gift planning at the University of Iowa Foundation, is familiar with the new law and its implications for seniors' financial and charitable planning. Hagan is available to help reporters and editors understand the in's and out's of the new law. She can be reached by calling 800-648-6973 or 319-335-3305, ext.  696, or by e-mail mailto:susan-hagan@uiowa.edu.

For your information, the following are what Susan Hagan regards as the "need-to-know" highlights of the new provision*:

-- The provision is effective only for tax years 2006 and 2007.

-- This provision applies only to individual donors who have reached age 70 1/2 by the time the charitable gift is made.

-- The charitable rollover is limited to $100,000 each year; in other words, a donor can give up to $200,000 directly from an IRA to charity over the next two years.

-- The charity must be a qualified charity, and nearly all well-known nonprofit organizations (including the University of Iowa Foundation) fall into this category. Note that donor advised funds (DAFs), private foundations and supporting organizations (SOs) are excluded. 

-- The rollover may be used to satisfy the donor's IRA required minimum distributions (RMDs) in 2006 and 2007.

-- The rollover amount will not be included in the donor's adjusted gross income (AGI), nor will the donor receive a deduction for the gift.  Because the rollover does not affect the donor's (AGI), it can be made in addition to any other charitable gifts the donor was intending or has already made.

-- The provisions apply only to gifts from regular IRAs and Roth IRAs, not to gifts from other types of retirement plans.

* Information in this media advisory should not be taken as legal or financial advice. Individuals contemplating tax implications of charitable giving should consult with their professional advisors.

STORY SOURCE: UI Foundation, P.O. Box 4550, Iowa City, Iowa 52244-4550

MEDIA CONTACT: News media representatives with questions about this advisory should contact: Susan Shullaw, UI Foundation senior vice president for strategic communications, at 800-648-6973 or 319-335-3305, ext. 861 or at susan-shullaw@uiowa.edu.