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| Taking Advantage of A Special Giving Opportunity |
The Reverend Herbert Spomer and his wife Carla are new residents at Luther Ridge Retirement Community, but they aren't new to the community. Herb has been the Chaplain at Luther Ridge for nine years. Herb and Carla first met at Concordia College in St. Paul, Minnesota. Herb was a native of St. Paul, and Carla had come there from her home in St. Louis. Like many couples whose professions require lengthy education, the Spomers had a long courtship that covered moves to several states. They were finally married in 1957 after Herb graduated from Concordia Seminary in St. Louis. Through the years, Herb's career took them to several states as he taught in Lutheran colleges and served several parishes. Carla raised their two daughters and taught school, even starting a nursery school at one point. When the Lutheran Church Missouri Synod closed the college in Fort Wayne, Indiana, where Herb had been teaching for twelve years, they moved to this area. Herb first taught at the Lutheran Seminary in Gettysburg and then pastored St. Thomas Lutheran Church for eighteen years. When he retired in 1998, he became the Chaplain at Luther Ridge.
A few months ago, Herb saw an article in this newsletter about the IRA rollover provision in the Pension Reform Bill that was signed into law last August. This provision allows individuals to make charitable donations from their IRA accounts without having the withdrawal count as taxable income. The Spomers have an IRA account from which they are required to take an annual withdrawal, even though they are fortunate not to need that extra money for living expenses. They realized that under the terms of the IRA rollover provision, they could use this mandatory withdrawal to make charitable donations and completely avoid having to pay income taxes on the withdrawal.
Herb contacted the LSS Foundation Office, and we provided him with a sample letter to send to his IRA administrator, requesting a direct charitable distribution be made from his account to three charities. The letter also asked the administrator to include his name as the donor of record when the funds were sent to the charities. He also sent a letter to each charity, notifying them to expect the gift, just in case the plan administrator neglected to identify him as the donor.
As instructed, the plan administrator sent the funds to the three charities. The Spomers paid off a pledge they had made to their church and made charitable gifts to LSS and another charity. The best part is that by making the gifts in this way, they saved at least $900 in income taxes, which meant that their charitable gifts could be that much larger.
The Spomers were delighted to be able to give more generous gifts this year because of this special provision. Unfortunately, the opportunity will end with 2007 unless Congress passes new legislation, so this may well be the only time such gifts can be made. Gifts of any size up to $100,000 may be made, but the gifts certainly don't have to be that large to benefit the donor. For example, an individual who uses this special provision to designate part of his required annual IRA disbursement to make his usual $4,000 tithe to his church could save over $1,000 in taxes.
The IRA Rollover provision allows this type of donation to be made only with certain restrictions:
- Donation must be made from a distribution from a traditional individual retirement account (IRA) or a Roth IRA which would otherwise be included in income.
- Donations may be up to $100,000 per year.
- The provision is effective only for 2006 & 2007.
- The provision only applies to donors age 70½ and older.
- Gifts cannot be made to donor advised funds, private foundations or "supporting organizations" or to fund a "life income" gift.
If you would like to have more information about making a charitable gift from your IRA and/or receive sample wording requesting an IRA donation to send to your IRA administrator, please contact the LSS Foundation Office at 717-854-4425.
For more information please select one of the following options:
1. If you would like to receive more information on the benefits of an IRA gift click here.
2. To learn more about making an IRA gift, you may print a brochure. Click Here.
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