IRA Charitable Rollover
Issue
The Council has actively supported permanence and expansion of the IRA Charitable Rollover since its inclusion in the Pension Protection Act of 2006 (PPA). As of December 18, 2015, the IRA Charitable Rollover was passed by Congress and signed into permanent law by the President, allowing taxpayers age 70 ½ or older to transfer up to $100,000 annually from their IRA accounts directly to charity without first having to recognize the distribution as income.
Prior to 2006, taxpayers wishing to transfer Individual Retirement Account (IRA) assets to charity first had to recognize the amount as income, make a transfer, and then claim a charitable deduction for the amount gifted. This often resulted in tax liability, even though the donor ultimately transferred the entire IRA distribution to charity. PPA partially solved this problem by allowing taxpayers age 70 ½ or older to transfer up to $100,000 annually from their IRA accounts directly to charity without first having to recognize the distribution as income. The IRA charitable rollover has proven to be very popular with taxpayers and beneficial to charities.
Despite its broad appeal, the provision remains limited in several respects: it is limited to taxpayers age 70½ or older; the amount of gifts is capped at $100,000; and donors are specifically not permitted to make charitable rollovers to donor-advised funds, supporting organizations, and private foundations.
During the 117th Congress, a modified version of the Legacy IRA Act was included in the Securing a Strong Retirement Act (H.R.2954) which passed by the House. The modified Legacy IRA provision would index the annual IRA charitable rollover cap to inflation and allow seniors to make a one-time IRA rollover gift to a charity through a life-income plan.
Council Position
The Council strongly supports expanding and enhancing the IRA charitable rollover by dropping the age threshold and expanding the IRA Charitable Rollover to include donor advised funds and supporting organizations. In addition, the Council supports the Legacy IRA Act, which would empower seniors with an additional tool for their charitable giving.
Recent Legislation
Legacy IRA Act (H.R.2909/S.243)
Summary: Expanding the IRA Charitable Rollover to encourage charitable giving by enabling seniors through life-income plans.
Securing a Strong Retirement Act (H.R.2954)
Summary: Makes changes to employer-sponsored retirement plans, includes modified version of Legacy IRA Act.
Additional Resources
