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IRA Rollover Included in President’s FY2008 Budget

(Feb. 12, 2007) President Bush’s newly released budget for Fiscal Year 2008 includes a provision to make the IRA Rollover provision permanent, as well as several other charitable giving incentives.

Last year, President Bush signed into law a pension reform bill that included several giving incentives, including the IRA rollover provision. However, the provision is scheduled to sunset at the end of 2007.

The IRA rollover provision included in the pension reform bill provided an exclusion from gross income for certain distributions of up to $100,000 from a traditional individual retirement account (IRA) or a Roth IRA, which would otherwise be included in income. The incentive only applies to donors age 70½ and older and only for gifts made directly to a charity (i.e., planned and deferred gifts cannot be made using this version of the IRA Rollover).

The president’s budget would make the provision permanent, but would not change any other aspects of the rollover. AFP will be pushing to not only make the provision permanent, but also to expand it by allowing for larger gifts and younger donors.

“AFP is pleased to see the president’s commitment to the IRA Rollover by making it permanent in his budget,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “This provision already has been effective in increasing fundraising for many charities across the country. However, as we work on Capitol Hill, we’ll be asking Congress to reduce the threshold age to 59½ and remove the $100,000 annual cap on IRA Rollover contributions.”

Other Provisions Also Made Permanent

The president’s budget also would make the following charitable giving incentives permanent:

  • Enhanced charitable deduction for contributions of food inventory
  • Enhanced deduction for corporate contributions of computer equipment for educational purposes
  • Increased limits on contributions of partial interests in real property for conservation purposes
  • Basis adjustment to stock of S corporations contributing appreciated property
  • Reform excise tax based on investment income of private foundations
  • Repeal of the $150 million limitation on qualified 501(c)(3) bonds
  • Repeal of certain restrictions on the use of qualified 501(c)(3) bonds for residential rental property.

It may be more challenging to expand the IRA Rollover and make it permanent because of the new Democratically controlled Congress, which will be focusing on other issues. Because of the Democrats’ control of the House and Senate, the president’s budget will not carry as much weight as in previous years.

However, the charitable giving provisions, especially the IRA Rollover, have enjoyed tremendous bipartisan support over the years. AFP will be working to identify and develop sponsors and charity “champions” in Congress who will be willing to help move the incentives through the legislative process.

A copy of the proposals in the president’s budget is in the Attachments section below. Discussion of the charitable giving incentives begins on page 28.

If you have questions, please contact Jason Lee, director, government relations, at jlee@afpnet.org.

Attachments

President's Budget Proposal FY 2008 — PDF Format, 1118691KB

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