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News & Press: Shared Intelligence

Strengthen Year-End Giving by Preserving the IRA Rollover

Wednesday, October 8, 2014   (0 Comments)
By Jeffrey D. Byrne, President + CEO, Jeffrey Byrne + Associates, Inc.

The year is winding down. Wrapping up those final year-end gifts is on everyone’s mind, but once again, the charitable IRA rollover is not a giving option. At least not yet anyway!

This on-again, off-again tax incentive that allows individuals 70½ or older to make gifts by rolling over funds from their IRA directly to a charity without tax penalties was created in 2006. The 2006 legislation expired in 2007 only to be extended again in the fall of 2008, retroactively from the first day of 2008 to the last day of 2009. It expired again in 2009 only to be extended in December 2010, retroactively to January 2010 through December 2011. And yet again, it expired in 2011, only to be revived in early 2013 for the 2012 and 2013 calendar year.

Now, it has expired again, making it impossible for donors to plan those donations that would maximize their giving by using IRA assets. Unless an IRA is a Roth, the account owner must take distributions starting at age 70½ and pay tax on the withdrawals. With the charitable IRA rollover, the donation, of up to $100,000, can count towards the minimum required distribution an owner would otherwise be required to take.

Legislation is pending to extend and make permanent the tax credit, but the clock is ticking on this giving incentive that has been an overwhelming success at a time when demand for services from nonprofits is increasing and government resources for nonprofits are shrinking. No further action is expected on pending legislation until after the November elections.

The EXPIRE Act of 2014 (S. 2260) creating another two-year extension was approved by the Senate Finance Committee in April. It would retroactively extend the current Charitable IRA rollover from Jan. 1, 2014, to Dec. 31, 2015. It mirrors the extensions approved in previous years and is considered to be the most likely to be approved.

A more positive option, though, is the America Gives More Act (H.R. 4719) making permanent the charitable IRA rollover. It passed the House of Representatives in July and now awaits consideration by the Senate. Despite its success in the House, it is still a long shot in the Senate. While representatives generally support encouraging gifts to nonprofits, it’s difficult to get support for a tax law change that could permanently cut tax revenue.

As industry experts, we have to act now to expand and make permanent the charitable IRA rollover. We must advocate for those laws that support nonprofits’ success. We “hire” our elected representatives with our votes. We must make sure our “employees” understand that tax incentives promoting charitable giving serves the greater good. There are three actions to take now, to create a short-term and long-term plan to support giving opportunities for older Americans:
  1. Contact your congressional leaders and urge them to reinstate the charitable IRA rollover by passing tax extension legislation as soon as possible through quick consideration of S. 2260.

  2. Contact your Senator to ask for support in the passage of H.R. 4719 to make the charitable IRA rollover permanent.

  3. Ask your clients to let their Congressional Representatives and U. S. Senators know the impact that the charitable IRA rollover has had on their organizations. Keeping elected officials informed on the positive impact of legislation within their district is critical to persuading Congress to pass a permanent version of this proven charitable giving incentive.
The charitable IRA rollover is an easy gift for older Americans to make. It enables many individuals to support their favorite nonprofits in ways that they wouldn’t be able to otherwise. Now is the time to push through the tax incentive for 2014, while working for a permanent solution that makes planning for a charitable IRA gift a possibility year-round.

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