IRA Rollover

The IRA charitable rollover, which expired on December 31, 2011, allowed 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 National Council supports the extension and expansion of the IRA charitable rollover.

Why It Matters to Nonprofits

The IRA rollover offered older Americans the opportunity to give back to the causes they support in their communities without suffering adverse tax consequences. The giving incentive was of particular value to individuals who did not claim itemized deductions on their tax return because the funds were sent directly to nonprofits from IRA accounts and were never counted as income. Congress’ failure to restore the IRA rollover means senior citizens who continue to support their communities will be penalized by additional taxation and fewer may give needed resources to support the work of nonprofits.

Status

The IRA rollover giving incentive expired at the beginning of 2011 and must be restored by Congress to ensure that individuals and communities benefit from the work of charitable nonprofits supported by these gifts. The House Ways and Means tax subcommittee held a hearing on April 26 to review several expired or expiring tax provisions, including the IRA rollover.

The Public Good IRA Rollover Act was introduced in 2011 in the House (H.R.2502) and Senate (S.557). The legislation would extend 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

What Nonprofits Can Do

Contact your Senators and Representatives and urge them to take action to extend and expend the IRA charitable rollover. 

Other Resources

• The Council on Foundations has produced a useful summary of the issue.
• Independent Sector offers talking points and other resources on this important issue.
• Summary of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 [485 KB]
• The Senate Finance Committee held a hearing titled "Extenders and Tax Reform: Seeking Long-term Solutions."