The Pension Protection Act permits, within limits, owners of IRA’s and Roth IRA’s who are over age 70-1/2 to make a direct transfer from the account to a qualified charity on a tax-free basis. Click here for a discussion of the IRA provisions of the Pension Protection Act.
In connection with recently published corrections to the 2006 Instructions for Form 1099-R and 5498, the Internal Revenue Service provided the following guidance with respect to reporting such "qualified charitable distributions":
Qualified charitable distributions. Section 1201 of the Pension Protection Act of 2006 allows certain account holders to direct a tax-free distribution to a qualified charity from a traditional IRA or Roth IRA. However, the trustee is not responsible for knowing if that charity is one described under section 408(d)(8) of the Internal Revenue Code. Therefore, follow the general rules for reporting distributions where the recipient is age 70 ½ or older. Enter code 7 in box 7 of Form 1099-R for these distributions. Do not use code F.
Accordingly, this instruction also provides inferential guidance regarding the IRA sponsor’s administrative responsibilities in processing a direction to make such a distribution.
© 2006 Sutherland Asbill & Brennan LLP. All Rights Reserved.
This article is for informational purposes and is not intended to constitute legal advice.
