Prior to the new law, a donor had to report a withdrawal from an IRA as income and then declare an offsetting tax deduction for the charitable contribution. Due to a variety of tax rules, including deduction limitations and phase-outs, the net effect of increasing income and then declaring a deduction was an increase in taxes for many potential donors.

Please view these sample instruction letters to initiate your gift.

The new IRA rollover option may provide you with the opportunity to support Colby with gifts from your IRA assets while avoiding the normal tax on IRA withdrawals.

• Donors who do not itemize their deductions
• Donors who are required to take minimum withdrawals from their IRAs but do not need that income currently.
• Donors whose income level causes the phase-out of their exemptions.
• Donors already giving at their 50 percent deduction limit.
• Donors for whom additional income will cause more of their Social Security income to be taxed.

There are a number of specific rules and points to consider with this new law:

• You must be 70.5 years of age or older at the time of the gift.
• Your IRA rollover gift must be made to a qualified charity.
• The transfer must go directly from your IRA to a qualified charity and cannot fund life income arrangements such as gift annuities or trusts.
• Your IRA rollover gifts cannot exceed $100,000 per tax year.
• The amount rolled over from your IRA will be excluded from your gross income.
• Your IRA rollover will count toward your minimum distribution requirement.
• There is no federal income tax deduction for the IRA rollover gift.
• The IRA rollover provision is effective only through December 31, 2007.

Gifts from retirement accounts other than IRAs—such as 401k, 403b, and SEP accounts—are not eligible. Donors may be able to make qualified transfers of money from other accounts to their IRA and then make a charitable gift from their IRA. Check with your tax advisor.

To take advantage of this opportunity to help Colby with a gift from your IRA, please call your IRA plan administrator to arrange for a direct transfer. Donors who transfer funds from their IRA should notify the Office of Planned Giving of their transfer, since the transfers are anonymous and Colby will have no way of identifying the gift without this information.

Colby will provide appropriate documentation concerning its status as a qualified charity and acknowledgement of your gift. If you need assistance or wish to get more information from the College, contact Susan Cook ’75 or Carolyn Kimberlin in the Office of Planned Giving by telephone at 1-800-809-0103 or by e-mail at plangift@colby.edu.