Morgan Stanley

New Federal Law Spurs Charitable Contributions from IRAS; Morgan Stanley Clients Donate Over $16 Million in 2006

Feb 13, 2007

New York —


A new federal law designed to encourage charitable giving by permitting tax-free charitable contributions from Individual Retirement Accounts is having its desired effect.

Nearly 1,000 Morgan Stanley clients took advantage of this provision to make $16.5 million in charitable contributions in 2006, according to the Firm’s Global Wealth Management Group.

“There is a large and growing population of people who have more assets in their retirement accounts than they consider necessary to sustain the lifestyle they want.  For such individuals, this new provision has proved an attractive way to support their charitable giving,” said Jim McCarthy, Managing Director, Retirement and Equity Solutions.

Under the Pension Protection Act of 2006, individuals aged 70 ½ or older may make tax-free distributions of up to $100,000 annually to qualified charitable organizations from traditional and/or Roth IRAs.  This provision will expire after 2007 unless extended by Congress.   

Such distributions count toward the minimum distribution requirement from an IRA, but are not included in calculating an individual taxpayer’s annual limitation on charitable deductions.

After Congress passed this law in 2006, Morgan Stanley put procedures in place to accommodate these types of IRA distributions and communicated the information internally to its Financial Advisors.

“We have sought to be proactive in advising our clients that another option may exist to aid them in their philanthropic pursuits,” McCarthy said.

One of the largest businesses of its kind in the world with approximately $680 billion in client assets, GWMG provides a range of wealth management products and services to individuals, businesses and institutions.  These include brokerage and investment advisory services, financial and wealth planning, credit and lending, banking and cash management, annuities and insurance, retirement and trust.

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Morgan Stanley does not render advice on tax and tax accounting matters to clients. This material was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal laws. Morgan Stanley and its Financial Advisors do not provide tax or legal advice. For the resolution of specific tax or legal questions, professional advice should be obtained from an attorney, accountant or tax advisor.

Contact: Media Relations, Christine Pollak, 914.225.6827