By January 1, 2016Blog

IRA Rollovers Piggy BankIt only took Congress 9 years to get it right.

After being first offered for the 2006 and 2007 tax years, the I.R.A. Charitable Rollover has been made permanent. This is much better news this December than December 2014 when Congress extended the giving incentive for a less than generous 14 days.

On December 18th the President signed the Consolidated Appropriations Act, 2016 (H.R. 2029) which included the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The PATH Act makes I.R.A. Rollovers to Charity available for the remainder of 2015 but also extends this planning opportunity indefinitely.

Here’s what you need to know:

  • I.R.A. rollovers can only be done by I.R.A. owners who are 70 1/2 or older.
  • The rollover must be made to a qualified public charity. (No, donor advised funds are NOT qualified under the provisions. Pretty much every other charity is qualified.)
  • The rollover is limited to $100,000 per year.
  • The I.R.A. owner donor can split the $100,000 among multiple charities.

Just as in the past, the benefit to the donor is that the amount directly transferred to charity is not recognized as taxable income to the donor. The rollover also counts against the donor’s required minimum distribution from their traditional I.R.A. The donor does not receive a charitable income tax deduction for the rollover.

Now what?

If you’re a donor and want to take advantage of the rollover for 2015, call your broker, investment professional or I.R.A. administrator immediately. If you act quickly (December 28th or 29th), chances are you can trigger the distribution to the charity of your choice.

If you’re a development professional:

  • Don’t interrupt your already scheduled year-end giving push.
  • Do make a few targeted courtesy calls today to donors who have taken advantage of I.R.A. rollovers in the past. I would make this an educational call and not an urgent ask. Here’s what I would say:

“I know you’ve taken advantage of I.R.A. rollover opportunities in the past. I’m just calling to wish you a Happy New Year and to let you know that Congress got it right this time. You can make an I.R.A. gift again this year, but the better news is that the provision has been made permanent. If this year isn’t right for you, the opportunity will continue into the new year and the next.”

You get the idea.


David Baker

Author David Baker

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