There are two separate pieces of legislation currently being considered by Congress that, if passed, would permanently extend the IRA charitable gifting incentive and forever eliminate a tax on this particular way to give — a key component in the financial plan for retirement of many of our clients.
The America Gives More Act (H.R. 644) would allow taxpayers over 70½ to donate up to $100,000 from their individual retirement accounts directly to schools, art programs, hospitals or whatever charitable organization they prefer. The Public Good Charitable Rollover Act of 2015, (S.1159) goes a step further and, in addition to making the rollover provision permanent, it would eliminate the $100,000 cap and allow donors to make charitable rollovers beginning at age 59½. This act would also permit IRA rollovers to donor-advised funds.
First enacted in 2006, the rollover provision was passed to encourage senior citizens to make charitable donations from an IRA by eliminating the tax burden. Since the most recent version expired on Jan. 1, 2015, a mandatory distribution from an IRA like this triggers a tax, which means some of the money you hoped would go to your non-profit of choice would instead support the government for taxpayers who do not take itemized deductions or their itemized deductions are subject to phase-outs.
The rollover provision has expired five times in the past decade, instilling a sense of uncertainty among donors and the organizations that benefit from their generosity. If either bill is signed into law, it would be one less thing to worry about when it comes to tax planning and would funnel more of your money directly to the charity you want to support.
Contact us here to learn how Wescott Financial Advisory Group can help make sure charitable giving is a well-planned piece of your financial retirement planning.