The new Pension Protection Act of 2006 (P.L.109-280) includes an encouraging change to allow individuals to make withdrawals from their IRAs for charitable contributions. Specifically, the new law provides an exclusion from gross income for otherwise taxable IRA distributions of up to $100,000 per year from traditional IRAs and Roth IRAs for "qualified charitable distributions." This opportunity to make these transfers is available during 2006 and 2007 and can be used by plan owners who have attained at least age 70 on the date of distribution to charity. ABI is optimistic that some of our more senior members may be able to take advantage of this new opportunity to fulfill an existing pledge or make a new pledge to benefit the ABI endowment.

While limited in its availability, the provision is a significant benefit to those who can take advantage of it. These special rules allowing distribution of nonqualified contributions to IRAs and Roth IRAs are particularly advantageous over the following two-year period.

The most significant change is a modification in the formula for distributions from IRAs. At present, many plan owners make nondeductible contributions to their IRAs because earnings grow tax deferred. However, under current law, a portion of each distribution from an IRA is taxable until the total amount of nondeductible contributions has been received. Exclusions for a qualified charitable distribution can be allowed only if the entire distribution would be allowed as deductible. In effect, a pro rata formula is applicable, which negates the entire charitable contribution, and such distributions are not deemed to be a qualified charitable distribution. The pension bill rules change this formula. The new treatment provides that taxable distributions are considered distributed first. This simplification in calculating the tax on the distributions is a preference that is designed to encourage individuals to make distributions to charities rather than withdrawals. Other factors to keep in mind are summarized below:

* IRA contributions to the ABI Endowment can satisfy the 5 percent minimum withdrawal provisions.
* Non-itemizers can claim an income tax charitable deduction.
* Residents of states with no state income tax receive the full benefit of this deduction.
* Qualified contribution deductions are not subject to the AGI percentage limitation.

Questions should be directed to Deputy Executive Director and General Counsel Ann vom Eigen. Please note that ABI does not provide tax advice. Consult your tax advisor about your individual tax situation.

New Century Council Member

John Tittle is an ABI director and long-time contributor to the Endowment, who recently decided to increase his giving to the Century Council level. Mr. Tittle has more than 25 years of bankruptcy advisory, restructuring, and financial consulting experience. He has taken a company public and has experience as chief financial officer, board member, and audit committee chair of an American Stock Exchange-listed retailer and wholesale distributor. Prior to joining LECG, Mr. Tittle most recently led the Southwest region for XRoads Solutions Group, LLC and previously was a partner in the financial advisory services practice of Deloitte, where he led the firm's reorganization services practice in the mid-America region. His areas of special emphasis include rendering bankruptcy advisory/ reorganization services on behalf of varied stakeholders in the bankruptcy/turnaround arena, obtaining debt and equity capital, acting as a consultant and/or principal in merger and acquisition activities, including substantial attention to due diligence matters, rendering business valuations and solvency opinions, and providing expert testimony and litigation consulting services in judicial proceedings. Mr. Tittle's industry experience includes airlines, manufacturing, retail, wholesale distribution, Internet, merchant power/utilities, telecommunications, media, insurance, construction, railroads, health care, aquaculture, sub-prime auto finance companies, restaurants, and oil and gas exploration and production.

He has found enormous value in the ABI. His experience with the ABI educational programs and the opportunities the ABI has provided to learn from other individuals in the industry have been invaluable.

"Contributing to the ABI Endowment Fund affords me the opportunity to support truly independent research and other works and studies that benefit us as a collective group of different restructuring disciplines. I believe the work of the Endowment Fund, coupled with our strong educational programs, define the organization within the restructuring/bankruptcy community and hopefully, to the public at large. Although our industry is in a limited 'downturn,' I strongly believe it is important to renew my commitment to the Endowment Fund and the ABI by increasing my contribution level to the Century Council mark."

Editor's Note: The Aug. 15, 2006, Honor Roll of Supporters on the ABI Endowment Fund erroneously included Bettina M. Whyte's contributions within the JayAlix corporate contributions. Ms. Whyte is now reflected in the Century Council Club level in the ABI Endowment materials.