Public Good IRA Rollover

Let’s Get Tax-Free IRA Giving Off The Tax Extender-Go-Round

Here is a list of Charitable Provisions on the “Tax Extender-Go-Round“:

  • Tax-Free Distributions From Individual Retirement Accounts for Charitable Purposes
  • Enhanced Charitable Deduction for Contributions of Food Inventory
  • Basis Adjustment to Stock of S Corporations Making Charitable Contributions of Property 
  • Special Rules for Contributions of Capital Gain Real Property for Conservation Purposes 

By “Tax Extender-Go-Round” I mean to say the tax laws that expire (sometimes annually, some every few years) and get re-upped in what looks like back-office deals between the parties cut around the end of each year.  A mishmash  laws – favors, if you will, to various sectors/constituents, whose only connection to each other is that someone had enough pull to stick it in the so called annual Tax Extender bill.

For tax-free IRA giving – the charitable IRA rollover provision – the merry-go-round effect (always at risk of expiring every year or two) may have been helpful in creating a sense of urgency (usually needed to get results in fundraising).  So, why would I be pushing a permanent IRS giving law?

The answer is in my last post on the Public Good Rollover Act of 2013.  That version of tax-free IRA giving proposes to extend the law to allow donors age 59 1/2 and older to roll their IRAs over for life income gifts like CGAs and CRTs. In essence, charitable organizations would be able to offer donors the opportunity of guaranteed lifetime income that will never run out like their IRAs could.

A friend in the field pointed out to me that IRA holders can now purchase lifetime annuity contracts in their IRAs that would essentially guarantee that  your IRA income is always fixed and there.  Our question to Congress is this:  why only give commercial annuity companies the opportunity to make money with annuities?  Why not give non-profits that same opportunity while also allowing donors to create substantial charitable legacies?

The heart of the planned giving field – lifetime income arrangements – has slowed down greatly over recent years (waiting for donors to get past the recessions and build up some capital gains to avoid).  As one of my colleague put it in his comments to my last post, opening up IRAs for life income gifts would essentially be a jobs bill, too!

Bug your Congressmen!  Not sure what else we can do to get tax-free IRA giving off the Tax Extender-Go-Round.

S. 1772: Public Good IRA Rollover Act of 2013 – For real?

This is a bill not only to reinstate the IRA Rollover, which should happen sooner or later, but it also throws in direct IRA transfers to establish planned gifts like Charitable Remainder Trusts and Gift Annuities! For donors age 59 1/2 and older!

Here is a link to the bill, if you are interested:  https://www.govtrack.us/congress/bills/113/s1772/text.

No way this bill gets passed by 12/31/13 – but I am sure the Senators who proposed know that.

The big takeaway is that IRA transfers to fund life income gifts is back in discussion in Congress!  That is great news for planned giving.