A LUMP OF COAL

H.R.7327 was the usual rigmarole of Congress making technical corrections related to the Pension Protection Act of 2006 for things like airline carrier bankruptcy funds to Roth IRAs. The “WHAM!” sound heard when this bill passed Congress was non-profit fundraisers slapping their foreheads because the legislation waived the mandatory minimum IRA distribution rule for 2009!

Until President Bush signed the “Worker, Retiree and Employer Recovery Act of 2008” into law on Dec. 23rd, people who are 70½ and older were required to distribute a certain amount of funds from their IRA to avoid a stiff tax penalty. And, the two-year extension (2008 and 2009) of the IRA Rollover provision also allowed those individuals to contribute up to $100,000 from their IRAs as a direct gift to a charity tax-free.

This new law allows individuals who are 70 1/2 and older to keep all of their funds in their IRA without receiving a tax penalty. This temporary waiver of the mandatory minimum distribution rule could detrimentally affect donations under the IRA Rollover provision. All the more reason to communicate clearly, persuasively and regularly with your donors!