Posted November 4th, 2015

What to Do With or Without the IRA Rollover

Congress returned from its summer recess with a full agenda to act on before year-end. Legislators face a number of pressing tasks including addressing the nation’s debt ceiling. Commentators have predicted that these issues may prevent Congress from discussing the IRA Rollover and other income tax provisions until late in the session.

The IRA Rollover provision, which allows individuals over 70½ to make direct distributions from their IRAs to a qualified charity on a tax-free basis, is part of a larger Tax Extenders Bill that includes a number of popular provisions that are widely expected to be passed in November or December.

In the past, the charitable IRA provision has been extended so late in the year that many donors had already taken their minimum required distributions. Nonprofits often found it impractical at that point to communicate with prospective IRA contributors in time for them to act before a December 31 deadline.

Keep in mind that in every year the IRA gift legislation has been extended the benefits have been retroactive to the beginning of that year. Under these circumstances, some have suggested that potential donors adopt the Nike slogan and “Just Do It.” If the provision is passed, the gifts are covered; if the provision is not passed, the amount directed to charity will be reportable as income but will also count as a charitable deduction, resulting in a wash for tax purposes for those who itemize and can fully deduct the gift amount. ■

For more in-depth information for advisors and gift planners on how certain donors can benefit from retirement plan gifts with or without the IRA Rollover legislation, see Robert Sharpe’s article “Rolling with the Rollover,” in the September 2015 issue of Trusts & Estates magazine. 

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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