The IRA charitable rollover has new life in a bi-partisan bill introduced today in the United States Senate. The Public Good Charitable Rollover Act of 2015, (S.1159) is sponsored by Sens. Charles E. Schumer (D-N.Y.), Susan Collins (R-Maine), Kirsten Gillibrand (D-N.Y.), and Thad Cochran (R-Miss).
The legislation calls for the restoration and permanent extension the IRA charitable rollover incentive. A permanent extension would eliminate the uncertainty caused by frequent lapses and subsequent extensions, which have made it especially challenging for donors to plan IRA distributions and charitable giving in advance.
The legislation also would enhance the value of the rollover by eliminating the $100,000 cap, allowing donors to make rollovers beginning at age 59½, and permitting rollovers to donor-advised funds, supporting organizations, and private foundations. Earlier this year, the House of Representatives passed H.R. 644, the America Gives More Act, which would make the IRA charitable rollover permanent, but the legislation did not include language to enhance the value of the rollover.
Independent Sector leaders have been pushing for extension of tax provisions that expired this past Dec. 31. Those incentives were: IRA charitable rollover; enhanced charitable deduction for food inventory; enhanced charitable deduction for land conservation; and giving by private foundations during times of crisis.
The new legislation deals only with the IRA charitable rollover. “Making this provision permanent is good for charities and good for senior citizens who contribute to them from their IRAs,” said Schumer, announcing the bill. “It will eliminate uncertainty for both IRA holders 70½ and older who give to charity from their IRAs and to the charities that receive these contributions. These IRA holders deserve the certainty that the minimal disbursements they need to make out of their IRAs every year can be given tax free to the charities of their choosing.”
Originally created by the Pension Protection Act of 2006 as a way to encourage older Americans to make gifts to charities, the IRA charitable rollover provision allowed individuals age 70½ and up to donate up to $100,000 to a qualifying public charity directly from an IRA without incurring tax on the withdrawal. This benefit is available to all taxpayers, regardless of whether they itemize their deductions. Without the rollover provision, a mandatory distribution from an IRA would trigger a tax burden, even if a taxpayer donates the money to charity and receives no individual benefit. The rollover removes this negative tax consequence, while encouraging retirees to invest in charitable causes and organizations. The IRA charitable rollover expired on Jan. 1, 2015 for the fifth time in recent years.