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IRA Rollover

The IRA charitable rollover, which was renewed on January 2, 2013, allows individual taxpayers older than 70 ½ years to donate up to $100,000 from their individual retirement accounts (IRAs) and Roth IRAs to charitable nonprofits without having to treat the withdrawals as taxable income. The Council of Nonprofits supports the extension and expansion of the IRA charitable rollover.

Why It Matters to Nonprofits

The IRA rollover offers older Americans the opportunity to give back to the causes they support in their communities without suffering adverse tax consequences. The giving incentive is of particular value to individuals who do not claim itemized deductions on their tax return because the funds are sent directly to nonprofits from IRA accounts and are never counted as income.

Status

The American Taxpayer Relief Act of 2012 extends for 2012 and 2013 the IRA rollover giving incentive, which expired at the end of 2011. The legislation will continue to allow individuals 70 ½ years and older to give up to 100,000 from their IRAs to charitable nonprofits without being taxed on their contributions. The law retroactively restores the tax incentive by permitting eligible individuals to give their mandatory distributions taken in December 2012 or January 2013 to charities and apply the rollover to their 2012 tax filing. The IRA rollover is expected to be taken up in comprehensive tax reform.

The Public Good IRA Rollover Act was introduced in 2011 in the House (H.R.2502) and Senate (S.557). The legislation would have extended the giving incentive that allows older Americans the opportunity to give to nonprofits directly from their individual retirement accounts without tax penalties. It also would lift the cap from the current $100,000 per year, reduce the age at which a person could make donations to nonprofits from 70 ½ to 59 ½, and expand the eligible organizations that could receive the rollovers from public charities also to include donor-advised funds. The bills were not enacted in the 112th Congress but may be reintroduced in 2013.

What Nonprofits Can Do

Contact your Senators and Representatives to thank them for their support of nonprofits through the extension of the IRA charitable rollover and to urge them to support the Public Good IRA Rollover Act in the 113th Congress. 

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