On August 17, 2006, President Bush signed the Pension Protection Act of 2006. The Act, in part, created a new tax law allowing those 70 � years of age or older to make transfers from their IRAs to charities without any tax liability.

The Act allows you to make transfers to qualified charities from your IRA without any negative tax impacts. If the cumulative transfer is less than $100,000 in the 2006 or 2007 tax years, any direct contribution will be completely excluded from your taxable income. You will not owe tax on the withdrawal from your IRA because the withdrawal will not be considered a regular distribution.

IRAs now represent an excellent source for your charitable giving. The assets in your IRA have grown tax free and will otherwise be taxed when you make withdrawals. In fact, if you leave your IRA to an heir other than your spouse, up to 65% of the assets could be consumed by income and estate taxes. Making charitable gifts with these tax-deferred assets may be your most tax-efficient method for giving. The company administering your IRA will be able to help facilitate any gift you want to make directly to Whitman.

A few points to keep in mind about the Pension Protection Act of 2006:

• The Pension Protection Act of 2006, H.R. 4, was passed by the House of Representatives on July 28, 2006, considered by the Senate on August 3, 2006, and signed by President Bush August 17, 2006. Section 1201 sets forth a new process by which a person may instruct the trustee of their individual retirement plan (IRA) to make a direct contribution to a qualifying charity.
• The person making the contribution must be at least 70 � years of age at the time the direct charitable distribution is completed.
• IRAs are the only type of retirement account eligible to initiate direct contributions. Other types of retirement accounts such as 401(k), 403(b) annuities, defined benefit and contribution plans, profit sharing plans, Keoghs and employer sponsored SEPs and SIMPLE plans are not eligible.
• The maximum allowable transfer under the Act is $100,000 per year in the 2006 and 2007 tax years. The amount transferred directly to charity shall not be includible in the gross income of the person making the contribution.
• Whitman College is a qualifying charity, defined as an organization described in section 170(b)(1)(A). Whitman�s tax ID number is 91-0567740. Donor advised funds and private foundations are not qualifying charities under the Act.
• The distributions cannot provide funding for gift annuities, pooled income funds, or other split interest gifts. The funding may be directed to endowments, fulfill pledges, or other purposes.
• Since the transfer of the IRA gift is direct and does not pass through your tax base, you are not able to claim a charitable deduction.
• As this is a new law, many investment firms and IRA administrators are working to prepare the appropriate process to facilitate the transfer. Please be sure to inform your IRA administrator that your gift should be a made directly to the Board of Trustees of Whitman College.