Private giving gets boost from federal tax law change

The Pension Protection Act of 2006, which took effect in August, allows donors to draw money from their traditional or Roth individual retirement accounts without the withdrawal being taxed as income.

The change in federal tax policy applies to gifts made to charitable and not-for-profit institutions in 2006 and 2007. Until the change took effect, a donor would be taxed on income at the applicable rate on the withdrawal and received a charitable contribution deduction.

Under the new policy, as much as $100,000 in 2006 and 2007 can be directed from an individual retirement account to Purdue without incurring income tax on the withdrawal.

Gordon Chavers, Purdue senior director of planned giving, said the change is a new way for donors to support university programs from funds accumulated over their careers.

"This important change in federal tax law creates a means for alumni and friends to make a gift and reduce tax liability at the same time," Chavers said.

Several provisions limit the timing and nature of the transfer: