President Approves One-Year Extension of Charitable IRA Rollover

By Jeffrey D. Davine

On December 19th, President Obama signed H.R. 5771, known as the “Tax Increase Prevention Act of 2014.” Among other things, this legislation extends the favorable charitable IRA rollover rule to gifts made in 2014.

The legislation allows persons who are older than 70½ to, once again, make a tax-free charitable gifts from traditional and Roth IRAs to charity.

During tax years 2006 – 2013, individuals who were older than 70½ were permitted to distribute up to $100,000 tax-free annually from their IRA to certain charities without having to include the distribution in gross income and then claim a charitable contribution deduction. This law was allowed to expire at the end of 2013. With the President signing this legislation, the charitable IRA rollover rule has been extended through the end of 2014. Unfortunately, this doesn’t leave donors with much time to take advantage of this special rule.

As a result, charities will need to quickly publicize the extension to prospective donors.

We suggest the following sample language that charities can use to publicize the extension and the limited time that donors have to utilize it:

For persons who are older than 70½, it is, once again, permissible to make a tax-favored charitable gift from a traditional or Roth IRA to charity. Unfortunately, donors only have until December 31st to act.

The President signed legislation on December 19th that extends the special charitable IRA rollover rule to gifts that are made during 2014. A total of up to $100,000 can be transferred directly from a traditional or a Roth IRA to {INSERT NAME OF CHARITY} without having to include the distribution in income. Moreover, these distributions will count toward the donor’s minimum IRA distribution requirement for 2014.

To qualify, a charitable IRA rollover must be made directly from the IRA to {INSERT NAME OF CHARITY}.

Please contact {INSERT NAME OF CHARITY} and we would be happy to discuss if this type of gift is the right one for you and, if you choose, assist you in making this gift.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s