Can an IRA be used to help indirectly finance life insurance owned by a charity? In this article, Steve Leimberg reviews and comments on recently published Ltr. Rul. 200741016 in which the Service concluded the arrangement is not a prohibited investment in insurance within the meaning of section 408(a)(3) of the Code such that the IRA would cease to be an IRA under section 408(a)(3).  MORE »

According to the National Committee on Planned Giving, the latest results collected from the NCPG IRA Gifts Survey have reached the $100 million mark. More precisely, the latest survey results show 5,814 individual distributions with a total value of more than $102 million. NCPG is encouraging members to contact their members of Congress to persuade them to support the Public Good IRA Rollover Act which would expand tax-free distributions from individual retirement accounts for charitable purposes. A sample letter can be found on NCPG's website along with an invitation to take the survey and review a detailed analysis of the results so far.  MORE »

According to an article published by InvestmentNews.com, IRA investors have taken advantage of provisions contained in the Pension Protection Act of 2006 to donate at least $75 million to charity. In an interview with the National Committee on Planned Giving, "The committee said that 4,193 IRA gifts had been reported as of June 4 with an average value of $17,917."  MORE »

In a legal memorandum published earlier this week, the IRS concluded that a partial transfer of a decedent's IRA to charities in satisfaction of a pecuniary bequest via the decedent's trust results in gross income to the estate and fails to qualify for an offsetting charitable deduction. Writing for Leimberg Information Services, UMKC law professor Christopher R. Hoyt takes issue with the IRS's position arguing it could result in double income taxation.  MORE »

On Thursday, August 17th, President Bush is scheduled to sign the Pension Protection Act of 2006 that includes a long-awaited provision that will permit taxpayers to make direct charitable transfers from their Individual Retirement Accounts. In this article, PGDC Editor Marc D. Hoffman reviews the new rules and how donors, charities, and IRA administrators might respond.  MORE »

With respect to 401(k) plans, only a surviving spouse can roll such amounts over into an IRA upon the death of the plan participant; otherwise, most companies require such amounts to be distributed within one year of death resulting in immediate income tax. In this article from the February 2006 issue of Trusts & Estates - the journal of wealth management, University of Missouri Kansas City law professor Christopher R. Hoyt discusses a philanthropic alternative.  MORE »

Following publication of our follow-up article by Chris Hoyt on indirect IRA rollovers last week, PGDC member Bruce Kinsella posted the following comment: "Could you please illustrate an example of a donor cashing in stock, paying the long term gains, and gifting the cash?" That's a great question because if a donor would consider liquidating an ordinary income asset (such as an IRA) with an offsetting charitable deduction, why shouldn't they also consider doing the same with long-term capital gain assets?  MORE »

Last week 1,300 gift planners convened in Orlando for the 18th National Conference on Planned Giving. And as suspected, the Katrina Emergency Tax Relief Act of 2005 and its implications on "indirect" IRA rollovers was a hot topic. In this follow-up to last week's article, Professor Christopher R. Hoyt, who presented at the conference on this subject, offers his further thoughts and computations.  MORE »

Those following the Katrina Emergency Tax Relief Act of 2005 were disappointed to learn that a provision that would have allowed direct tax-free rollovers of IRA assets to charity failed to make it into the final bill. However, the planned giving community has been abuzz over the past few days discussing other bill provisions that may facilitate the next best thing -- the "indirect" IRA rollover. Is this a viable plan? It depends.  MORE »

Qualified retirement plans and individual retirement accounts are trusts or custodial accounts that hold a person's tax deferred retirement assets. Their principal tax advantage is income tax deferral. They include IRC Sec. 401(a) Qualified Retirement Plans (profit sharing, ESOP, 401(K) and "Keogh" plans); Sec. 408 (IRAs, SEPs and SIMPLE Plans) and Sec. 403(b) (tax sheltered annuities and custodial accounts). This memorandum discusses the income and estate tax economics of lifetime and testamentary charitable and noncharitable transfers of retirement plan assets, along with guidelines planners should consider in structuring such transfers.  MORE »