H.R. 4 - Pension Protection Act of 2006

The Pension Protection Act of 2006 is one of the most important legislative measures affecting nonprofit and charitable organizations in recent history. This law was enacted on August 17, 2006 and provides giving incentives, including the IRA Charitable Rollover, and numerous charitable reforms intended to prevent the abuse of charity tax laws.

Some of the most important provisions that may affect your grantmaking involve:

  • IRA Charitable Rollover
  • Increases in Penalty Excise Taxes
  • Expansion of the Base for the Private Foundation Tax on Investment Income
  • Donor-Advised Funds
  • Supporting Organizations
  • Application of the Excess Business Holdings Rule to Donor-Advised Funds

 

On March 27, 2007, the IRS issued Notice 2006-109, which provides guidance to private foundations and to sponsoring organizations of donor-advised funds concerning how they may identify public charities that are supporting organizations. Determining whether a grantee is a supporting organization is important to both private foundations and community foundations because the Pension Protection Act of 2006 imposes new requirements on distributions from private foundations and donor-advised funds to certain supporting organizations. Read More About This Topic