Take Action Today to Expand the IRA Charitable Rollover

Posted by National Association of Charitable Gift Planners on Aug 9, 2018 8:30:00 AM

For the past twelve years, the IRA Charitable Rollover has allowed generous, older Americans to donate hundreds of millions of dollars from their Individual Retirement Accounts directly to America’s charities – and the populations they serve – during a time when traditional charitable contributions are expected to decline because of recent changes to the United States tax code.  The IRA Rollover has generated an enormous amount of new charitable giving to thousands and thousands of nonprofits that work every day to enrich lives and strengthen communities across the country.  Given the great success of the IRA Rollover, and the extent to which the charitable sector and donors alike have come to rely on this critical giving incentive, CGP was proud to lead the fight in Congress to make the IRA Rollover a permanent part of the tax code at the end of 2015.  And with this permanent, albeit limited, IRA Rollover firmly in place and the House of Representatives considering additional tax reform measures this year, now is a critical time to push for an expanded IRA Rollover provision.

Accordingly, CGP is proud to support the Legacy IRA Act (HR 1337), federal legislation that would expand the current-law IRA Rollover to allow for life-income gifts, including charitable gift annuities and charitable remainder trusts.  CGP believes this legislation will allow an entire generation of Americans with average resources to make critical gifts to charitable organizations in their communities while still receiving a modest amount of retirement income. 

To help build support for the Legacy IRA Act and encourage the House to advance this legislation during the coming months, CGP is asking all members to take action today.    

What is the Legacy IRA Act?  

The Legacy IRA Act would permit tax-free distributions, up to $400,000, from Individual Retirement Accounts to a split-interest entity until December 31, 2021.  Split-interest entities include charitable gift annuities, charitable remainder trusts, and charitable annuity trusts.  This is an excellent opportunity for taxpayers 65 and over who depend on their retirement assets but also wish to make a significant charitable impact.  

How can I help?  

Call your Representative and ask that they (1) join HR 1337 as a cosponsor and (2) urge Ways & Means Chairman Kevin Brady to include the Legacy IRA Act in the retirement provisions of Tax Reform 2.0.   

To find contact information for your Representative, go to https://www.govtrack.us/congress/members and enter your address.  Your Representative’s name will appear on the next page, along with his/her phone number, website (which will contain a web form for contacting the office), and twitter handle.    

When you call your Representative’s office, simply state your name and organization and ask to speak to the staffer who handles tax issues.  Odds are you’ll be sent to voicemail or asked to leave a message with the receptionist.  In either case, say you’d like to speak with the staffer about HR 1337 and tax legislation expected to move through the House this fall. 

What should I say when I speak with someone?  

Discuss the IRA Rollover provision and the expansion contained in HR 1337 based on the talking points below.  Your “ask” is that the Representative sign onto HR 1337 as a cosponsor and advocate for its inclusion in Tax Reform 2.0 which is scheduled for a vote in the House this fall.   

  • Under current law, individuals age 70 ½ or older can make gifts from an Individual Retirement Account of up to $100,000 per year directly to public charities (other than donor advised funds and supporting organizations) without having to report the IRA distributions as taxable income on their federal income tax returns. Although a charitable deduction isn’t allowed, not being taxed on otherwise taxable income is the equivalent of a deduction.
  • First enacted in 2006, this law was made permanent at the end of 2015. Over the last 12 years, direct IRA rollovers have helped American charities feed the hungry as well as provide education, medical services, housing assistance and myriad other services that Americans need.

  • Explain in detail how your organization has benefited from such direct gifts.
  • Earlier this year, Rep. Kevin Cramer (R-ND) along with several members of the Ways & Means Committee, such as Reps. Earl Blumenauer (D-OR), Erik Paulsen (R-MN) and Kristi Noem (R-SD) introduced the Legacy IRA Act (HR 1337), which authorizes tax-free IRA rollovers for life-income gifts which both benefits charities and provides taxable retirement income for the donors.
  • In short, the Legacy IRA Act permits life-income rollovers at age 65 and maintains direct rollovers beginning at age 70½. Qualified life-income plans include charitable remainder trusts and charitable gift annuities. There is a $400,000 cap for life-income gifts beginning at age 65, and for individuals 70½ or older, the combined ceiling for direct and life-income transfers is $400,000 with a $100,000 cap for direct transfers.
  • Under the authorized life-income plans, the IRA owners will be taxed on income received at ordinary income tax rates. Because the payouts on these plans are five percent or more, there generally will be more income paid from the charitable life-income plans than under the normal minimum required distribution rules.
  • The only authorized income beneficiaries of the life-income plans are the individual IRA owner, his or her spouse, or both. At death, the assets in the plan go directly to the named qualified charity or charities and not to family members.
  • Estimates suggest that IRAs and other qualified plans in this country contain trillions of dollars in assets. Many of these IRA owners want to make charitable gifts but also need retirement income. Life-income gifts under the Legacy IRA Act are a way for donors of average resources to combine charitable gifts with retirement income. It will allow Americans of average means (who meet the minimum age requirement), and not just wealthy taxpayers, to benefit charities and the people and communities those charities serve.
  • The bill’s cost (or score) is only $106 million over 10 years. This is a tiny fraction of the money – potentially billions of dollars in new charitable giving – that charities could receive if the Legacy IRA Act is enacted into law. This figure is also significantly lower than previous versions of IRA Rollover legislation that included a life-income component.
  • Please have your boss contact Rep. Cramer’s office and sign onto HR 1337 as a cosponsor and urge Ways & Means Chairman Kevin Brady to include the Legacy IRA Act in the retirement provisions of Tax Reform 2.0 which is scheduled for a vote in the fall.  


How else can I help?  

Consider sending an email or tweeting with your request.


Topics: Advocacy, IRA Charitable Rollover