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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.

Expanding the IRA Charitable Rollover is important not just in the case of large donors, but also for mid-level and smaller donors, as the average IRA Charitable Rollover gift is $7,600.

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. Also, it would increase the amount an individual can contribute each year to an IRA Charitable Rollover from the current level of $100,000.

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 is legislation to expand the IRA Charitable Rollover currently before 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 raising the maximum annual contribution to an IRA Charitable Rollover from its current level of $100,000 to $400,000. 

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

On May 5th, the Ways & Means Committee unanimously reported out of the committee for consideration the House Floor H.R. 2954, the Securing a Strong Retirement Act,  which among its many provisions included an expansion of the IRA Charitable Rollover. Specifically, the expansion would increase the current maximum annual contribution to an IRA Charitable from $100,000 by indexing the maximum to the annual rate of inflation (the Consumer Price Index or CPI), allowing the cap to increase each year as the CPI increases. This legislation is expected to go to the House Floor for consideration later this year.

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)
  • John Cornyn (R-TX)
  • Steve Daines (R-MT)
  • Lisa Murkowski (R-AK)
  • Gary Peters (D-MI)
  • Jacky Rosen (D-NV)
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