IRA Gift Update

On Dec. 19 H.R. 5771, the Tax Increase Prevention Act of 2014, was signed into law. This legislation retroactively extended a number of expired tax incentives.

Included in the law is the Charitable IRA Rollover provision allowing individuals age 70½ and older to make direct transfers from traditional and Roth IRAs to qualified charities in amounts up to $100,000 free from federal taxation and income taxes under the laws of states that follow federal guidelines for determination of Adjusted Gross Income (AGI). Note that the extension is for 2014 only and applies to gifts completed by Dec. 31, 2014.

This opportunity applies only to IRAs and not to 401(k)s, 403(b)s and other similar qualified retirement plans. Gifts must be made directly to a qualified charity and may not be made to donor advised funds, private foundations or supporting organizations.

Individuals who have not yet taken required minimum distributions from IRAs may now wish to make direct tax-free transfers to charity. Those who made direct transfers to charity earlier this year are covered by the retroactive nature of the provision and such distributions will count toward their required withdrawals for 2014. Donors with check writing privileges on their IRA accounts may find this to be the most effective way to make their gifts given the short time frame.

Check with us, your IRA administrator or your advisors for additional information.