On August 17, 2006, the President signed into law the Pension Protection Act of 2006, which provides to strengthen pension funds and provides a myriad of other tax changes.
The Pension Protection Act allows the 70 1/2 year old + taxpayer to contribute directly from their IRA account. The contributor may donate up to $100,000 per year from their IRA. The distribution will be tax-free and the contributor will avoid the penalty on early withdrawal. Since the distribution will not be included in taxable income, individuals will not be able to claim a tax deduction for the charitable contribution.
You can enter these IRA Transfers in your CMS System, acknowledging the receipt of the contribution, lowering the amount owed on the contributor’s pledge, but show that contribution as “non-deductible” to conform with the new law!
From CMS Contribution, click Options | Contribution Types Setup | Add and add the type P with a Description IRA Transfer - PPA 2006and click OK. Click the checkbox at Description required.
When you receive notice of the IRA transfer (remember, the distribution must pass directly from the IRA to the church), click Enter Contributions and enter the date of the transfer as the Batch Date.
Bring up the contributor in the Contribution Entry display and enter the amount of the transfer. Change the Contribution type from C to P(enter)
and a Special Contributions window will display.
Enter the amount of the contribution in the Non-Deductible Amount field (the same as the Contributed Amount). Enter a complete description of the transfer in the Description field. Click OK.
Print the Edit List and Post the batch as usual.
When you print your contributor's Yearly Detail statement, the system will acknowledge the receipt of the contribution and adjust the pledge balance accordingly.
NOTE: The Quarterly and Monthly Statement formats will not display the non-deductible contribution breakdown.
But the Total of all contributions will display the non-deductible amount and reduce the total by that amount!