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IRA Charitable Rollover

IRA Charitable Rollover: What is it?

The IRA charitable rollover allows taxpayers to make tax-free charitable gifts directly from their Individual Retirement Accounts to eligible charities, 

Through the IRA Charitable Rollover, taxpayers can meet the annual Required Minimum Distribution, exclude the distributions from their taxable income, and simultaneously support the charities of their choice.

Why do nonprofits care?

This is a significant incentive for individual donors to give to charitable causes. 

With 10,000 Baby Boomers turning 65 each day, an expansion of this law could mean significantly more resources going to support nonprofits and charitable causes.

What is the Ideal Policy?

The Nonprofit Alliance calls on Congress to expand the IRA Charitable Rollover legislation. Ideally, Congress would lower the minimum age to establish an IRA Charitable Rollover from 70 1/2 to 65. Alsoit would increase the amount an individual can contribute each year to an IRA Charitable Rollover from $100,000 to $130,000.

What is the current situation?

Under current law individuals are required to wait until age 70 1/2 before establishing an IRA Charitable Rollover. The amount one can contribute to an IRA Charitable Rollover is limited to $100,000/year.

What to Keep an Eye On?

There are bills to expand the IRA Charitable Rollover in both the House and the Senate.

In the Senate

Senators Kevin Cramer (R-ND) and Debbie Stabenow (D-MI) have introduced S. 243, the Legacy IRA Act, which would lower the age for establishing an IRA Charitable Rollover from 70 1/2 to 65, while also increasing the maximum annual contribution to an IRA Charitable Rollover from $100,000/year to $130,000/year.

This legislation has a very low cost to the Treasury, having been “scored” by the Joint Committee on Taxation (Congress’s official body for estimating the impact of tax legislation on the Treasury) at a relatively inexpensive $38 million/year. 

Importantly, a number of planned giving experts indicate that the passing the Legacy IRA Act could result in an additional $1 billion each year for charities.

In the House

The Ways & Means Committee, led by Committee Chairman Richie Neal (D-MA) and the Committee’s Ranking Republican Kevin Brady (R-TX), included in its package of retirement legislation a provision which would increase the annual contribution limit to an IRA Charitable Rollover from $100,000/year to $130,000/year. 

The Ways & Means Committee is expected to take up its package of retirement legislation early this year. It is likely to be approved by the Committee—and ultimately by the entire House of Representatives—with this change to the IRA Charitable Rollover included.

Additionally in the coming months, Congressman Don Beyer (D-VA) is expected to introduce the House version of the Legacy IRA Act, which will have identical language to its companion Senate version.

Who are key players?

IN THE HOUSE

  • Richie Neal (D-MA), Ways & Means Committee Chairman
  • Kevin Brady (R-TX), Ways & Means Committee Ranking Republican
  • Don Beyer (D-VA), serves on the Ways & Means Committee

IN THE SENATE 

  • Senators Kevin Cramer (R-ND)
  • Debbie Stabenow (D-MI)
  • Senators Steve Daines (R-MT)
  • Jacky Rosen (D-NV)
  • John Cornyn (R-TX)
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