Time is running out. Congress included a special, temporary charitable incentive as part of the recently passed Pension Protection Act. The law allows individuals 70-1/2  years old and older to transfer up to $100,000 in a given year directly from an IRA to a charitable organization and pay no income tax on that distribution. The deadline is Dec. 31, 2007.

At age 70-1/2, holders of traditional IRAs must begin taking withdrawals and that income is generally taxed. For qualified individuals, however, a distribution of up to $100,000 in a given year, transferred directly to a charitable organization, will not be taxed under this law. It is important to note that the IRA trustee must transfer the donation directly from the IRA, to the charity. Donors may not personally take possession of the withdrawn funds and later make a gift to a charity, and still benefit from a tax-free distribution. Also, if a donor receives any personal benefit from making a gift in this way, the withdrawal is disqualified from tax exemption. Premiums given by a charity in return for a gift or annuity payments on a charitable gift annuity are examples of donor benefits that disqualify a donor from taking advantage of the tax-free distribution.

Since the law is only in effect until Dec. 31, 2007, speak with your IRA trustee or tax advisor as soon as possible to ensure this temporary opportunity meets your personal financial and philanthropic goals. Consider your annual year-end gift to the Minnesota Senior Federation in this manner.