Will Congress Expand the IRA Charitable Rollover This Time?
Currently, individuals who are at least 70 1/2 are able to make tax-free charitable gifts directly from their IRAs to eligible charities. This law is set to expire at the end of the year. There are also some important restrictions under the current law:
- The donor must be at least 70 1/2
- Charitable IRA distributions are capped at $100,000 annually
- Gifts cannot be "life income" gifts -- the IRA distribution cannot be made in exchange for a charitable gift annuity, to a charitable remainder trust, or to a pooled income fund
- Gifts cannot be made to private foundations, donor advised funds, or supporting organizations
On April 22nd, Senator Dorgan (D-ND) and Senator Snowe (R-ME) introduced The Public Good IRA Rollover Act of 2009 (S. 864) to make the charitable IRA rollover permanent and expand current law. Versions of this bill were introduced in prior sessions of Congress, but did not survive. The Partnership for Philanthropic Planning issued a bulletin that describes the new Senate bill:
This legislation would make the IRA Charitable Rollover permanent, remove the $100,000 annual limit on donations, provide IRA owners with a planned giving option starting at age 59½, and allow for distributions to supporting organizations, donor-advised funds, and private foundations.
Companion legislation (H.R. 1250) was introduced in the House last month.
The bill contains the following provisions:
- Donors still have to be 70 1/2 to make direct charitable gifts from their IRAs
- Starting at age 59 1/2, donors can make planned gifts using IRA funds -- i.e., gifts in exchange for a charitable gift annuity, gifts through a charitable remainder trust or to a pooled income fund (with special rules, of course)
- The $100,000 annual cap is removed
- Gifts can be made to public charities and private foundations, donor advised funds and pooled income funds
The House and Senate bills are in committee. As you know, many bills don't get any further. But if the bills survive, I'll continue to report on their progress. The ability to make lifetime tax-free gifts of IRA assets to charity has been an attractive choice for some individuals who are concerned about the heavy taxation of IRA assets and are charitably inclined.
