January 25, 2007 | Read Time: 1 minute
The Internal Revenue Service has published guidelines explaining a new law that offers tax benefits to donors who make gifts to charity directly from their individual retirement accounts.
Under the Pension Protection Act, which Congress passed in August, donors older than 70 may transfer up to $100,000 from their individual retirement accounts to charity in 2006 and 2007.
Although charities expect to reap as much as $1-billion in gifts from the law, confusion about how to handle the transfers among donors, charities, and the financial companies that manage individual retirement accounts has delayed many gifts, according to fund raisers.
The guidelines, published in a question-and-answer format, are designed to clarify how the retirement-account transactions work, including how much may be given from an IRA account to charity, how the gift should be treated under tax rules, and how the donor and financial institution should manage the transfer.
A copy of the guidelines (Notice 2007-7) is available online. The portion of the notice related to IRA transfers begins on Page 13 of the notice.
