Wednesday, November 14, 2007

Important news for your older donors

This is the last year that donors can qualify for special tax advantages through the Pension Protection Act of 2006. Until December 31, 2007, donors over age 70 1/2 can make tax-free distributions of up to $100,000 to 501(c)(3) non-profit organizations directly from their traditional and Roth IRA accounts.

Distributions must be made DIRECTLY to your organization, not to the donor. Otherwise, they will be taxed for this income.

Donors over 59 1/2 can make withdrawals and donate them to an organization without the 10% penalty for early withdrawal (although they must report this as part of their income, they can claim it as a deduction). This is especially advantageous for donors who must make mandatory withdrawals from their IRAs, and those who want to avoid additional taxes on their Social Security benefits.

Thank you to the wonderful work of the Sharpe Group for educating all of us on this issue, and for producing some WONDERFUL brochures that organizations can send to their donors.

You can view these here: