December 19 IRA Rollover Update

H.R. 5771, the Tax Increase Prevention Act of 2014, which includes the retroactive extension of a variety of expired tax provisions, has been passed by Congress (see earlier blog post for info) and is currently awaiting the President’s signature as of 12/19/14, 5:20pm CT. While it is anticipated that President Obama will indeed sign the bill, he has just left for holiday vacation and therefore a signature may be delayed. It is unclear if or how long this action will be delayed. Check back for updates.

In the meantime, Sharpe Group has some suggested donor language you can prepare now to send to your donors after the President signs the bill. Click here to see our eBlast with this information.

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.

2014 Charitable IRA Update

For those interested in the current status of IRA gift opportunities, this update is intended as a source of information and ideas for donors and advisors to consider as they make charitable gift plans for the remainder of this year. As of December 12, 2014 Congress had not as yet determined if individuals will be allowed to make qualified charitable distributions directly from their traditional or Roth IRAs this year.


Beginning in 2006 Congress has allowed donors over age 70 ½ to make qualified distributions of up to $100,000 directly to charitable interests from their traditional or Roth IRAs. In that case the gift would not be reported as income by the donor and thus not serve to increase their adjusted gross income in ways that could have a negative impact on their overall tax picture.

Current Status

The legislation that allowed for such gifts last year expired December 31, 2013 and as noted above has not yet been renewed for 2014.

The House of Representatives passed a bill that would provide for such gifts retroactive to January 1st of this year. At this point it is uncertain whether the Senate will also pass this legislation, though many expect that to happen in the coming weeks. Congress allowed the provision to expire at the end of 2012 but re-enacted it retroactive to 2012 in early 2013 so it is possible the legislation could be passed in early 2015 retroactive to this year.

In the meantime, many donors are wondering how they should proceed in light of this uncertainty if they are considering a gift from their IRA.

IRA holders over 70 ½ who are required to take mandatory distributions from their IRA may still wish to make gifts directly from their IRA to the extent they do not exceed $100,000 (the limit under prior legislation) or the amount of their mandatory withdrawal they have not yet taken, whichever is less.

In that case the gift will qualify if, as widely expected, retroactive legislation is enacted. If the legislation were NOT to be enacted, the gift should be treated as a withdrawal from one’s IRA with a charitable deduction then allowed for the amount of the charitable gift subject to any limitations that would otherwise apply to gifts of cash.

Suggestions for Consideration

Therefore, those considering making a gift from an IRA this year and have not yet taken all or a portion of their mandatory withdrawal amount, they may wish to consider proceeding with a gift directly from the IRA.

This would be preferred to a situation where the withdrawal was taken and the provision allowing gifts directly from an IRA were to be subsequently enacted after the withdrawal and gift had then been made. In that case it would not then be possible to reverse the withdrawal and make the gift directly from the IRA.

Those considering IRA gifts for 2014 should consult with their accountant or other tax advisor and share this update as a starting point for discussion of what may be the best course of action under particular circumstances.

Using Stock for Charitable Giving

The stock market is at an all-time high. Did you know that many donors gain significant tax benefits by gifting long-term appreciated stock instead of cash?

Now is the time to educate them about their options. Many charities receive roughly 40 percent of their yearly fundraising totals in the final weeks of the year. And not every donor realizes that using stock for charitable giving might save them a lot of money.

Guiding donors through their options is time consuming, so we recommend creating your year-end giving plan each September for implementation during October and November. The year-end giving season is critical to most nonprofits, so don’t miss out on this opportunity.

If you need assistance, Sharpe Group makes it easy to contact your donors with four specially designed year-end giving brochures. They’re a cost-effective way for you to sweep your mailing list while reminding your donors to keep your organization top of mind as they plan their year-end giving.

We’ll customize them for you to use:

  • As an integral part of your regularly scheduled year-end appeal
  • As an effective addition to a gift acknowledgment package this fall
  • As a convenient way to contact younger donors at least once a year

Review designs or place your order directly from our website, or contact us to talk with one of our consultants.

Your donors are thinking about making charitable gifts now. Help them explore using stock for charitable giving, along with other options like gifts from retirement plans and bequests.