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Posted December 17th, 2014

December 17 IRA Rollover Update

On December 16 Congress passed  H.R. 5771, the Tax Increase Prevention Act of 2014, which includes the retroactive extension of a variety of expired tax provisions. This is expected to be signed by the President and enacted into law.

Included is the IRA Rollover provision allowing individuals age 70½ and older to make direct transfers from traditional and Roth IRAs to qualified charities in amounts up to $100,000 free from federal taxation and income taxes under the laws of states that follow federal guidelines for determination of Adjusted Gross Income (AGI). Note that the extension is for 2014 only and applies to gifts completed by December 31, 2014.

This provision applies only to IRAs and not to 401(k)s, 403(b)s and other similar qualified retirement plans. Gifts must be made directly to a qualified charity and not to donor advised funds, private foundations, supporting organizations or to fund gift annuities, charitable remainder trusts or other split interest gifts.

Individuals who have been waiting to take required minimum distributions from IRAs may now wish to make direct tax-free transfers to charity. Those who made direct transfers to charity earlier this year are covered by the retroactive nature of the provision. Such distributions will count toward their required withdrawals for 2014. Donors with check writing privileges on their IRA accounts may find this to be the most effective way to make their gifts given the short time frame.

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