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Congress Finally Making Tax Break for IRA Charitable Transfers Permanent

After much delay and taxpayer uncertainty, Congress is finally poised to make permanent a tax break for certain charitable donations of IRA assets.

Traditional IRA owners age 70 ½ can continue to directly donate up to $100,000 a year from those retirement accounts to their favorite charities. They won’t get a tax deduction, but the money won’t count as taxable income when contributed this way.

The provision for IRA charitable transfers has been highly popular since it was first passed in 2006. But its status has been a source of frustration to many, because lawmakers have nearly allowed it to expire five times, leaving donors in the dark for much of the year as to whether it would be extended. The latest proposal would be retroactive to the beginning of 2015. Making charitable IRA transfers is a great and efficient way to transfer retirement funds to a charity without having to incur a taxable distribution on the amount transferred. The donations count as part of the IRA owner’s required annual withdrawal—so if the owner’s minimum withdrawal is $18,000 in 2015 and she makes $8,000 of qualified donations with IRA assets, she only has to withdraw $10,000 for 2015. However, individuals over the age of 701/2 interested in making charitable donations must act quickly, as transfers must be made before the end of the year to count for 2015.

IRATo learn more about the self-directed IRA, please contact a retirement tax expert at 800-472-0646.

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Posted in IRA Category