2014 Charitable IRA Update | Sharpe Group
Posted December 12th, 2014

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.

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