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The Long (and Continuing) Travels of the Charitable IRA Rollover

The Charitable IRA Rollover was approved last week by the House Ways and Means Committee as part of a package of tax extenders, and is now headed to the full House for a vote. But the journey for the now expired provision is far from over.

Since being first approved in 2006, the IRA Rollover provision has expired—and been reinstated—several times in a process AFP and other charities have gotten used to. “It’s not been a great way to develop policy,” said Jason Lee, AFP’s general counsel. “Charities have not been able to plan their fundraising with the IRA Rollover effectively, much less market this key charitable giving incentive, when it is constantly expiring and working on the premise that it will be reinstated and made retroactive.”

A ray of hope came earlier this year when Rep. Dave Camp (R-Mich.), the chair of the Ways and Means Committee, indicated his displeasure of the constant back-and-forth as well. His plan was to pass a bill that would make several of the tax extenders permanent (finally)—but only a few.

Fortunately, the IRA Rollover was one of those provisions, approved with several other charity-related items including:

  • tax incentives for gifts of conversation easements and food inventory;
  • a flat one percent excise tax on private foundation income and
  • an extension of the tax deadline for charitable gifts from December 31 to the following April 15, permitting  taxpayers to deduct those gifts for the prior year.

Chairman Camp’s approach is even more critical as Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee is taking an entirely different approach. Not only would the tax provisions like the IRA Rollover in a Senate bill be temporary—only extended through Dec. 31, 2015—but his plan is to not extend them again after they expire in 2015.

In a press release accompanying the introduction of the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, Sen. Wyden stated, “I want to be straightforward on one point – this will be the last tax extenders bill the committee takes up as long as I’m chairman. That’s why the bill is called the EXPIRE Act.  It is meant to expire.”

The EXPIRE Act was approved by the Finance Committee and is now awaiting action on the Senate floor.

“Given the differences in approaches this year between the House and Senate, it’s imperative we demonstrate as much support as we can for the IRA Rollover provision,” said Lee. “We encourage all U.S. members to reach out to their members of Congress and urge them to support the creation of a permanent IRA Rollover.”

Members can find their Representatives’ contact information by entering their zip code here. Senators’ contact information here.

Members can use these bullet points:

  • Tax incentives such as the IRA Charitable Rollover provision play a vital role in encouraging donors to make gifts. The rollover provision is a powerful and unique way that donors can support charitable causes in their communities.
  • Private donations help leverage the impact of government investments and allow charities to provide the programs and services that do much to augment the work of the government. In that sense, the IRA Rollover provision reduces the burden on the government while having a positive impact in our communities.
  • It is estimated that there is more than $3 trillion in retirement funds such as IRAs. Many individuals have more than sufficient funds to retire comfortably. Even if only a small percentage of these funds were donated to charitable purposes, it could add millions of dollars to support the vital work that nonprofit organizations do in communities across America. 
  • The IRA Charitable Rollover has worked very successfully over the last few years, but it would be far more effective if it were made permanent. Because donors are unable to count on the IRA Rollover being in effect every year, they rarely plan ahead to set aside funds to utilize the provision. Similarly, charities and financial planners cannot counsel donors about the IRA Rollover provision given the almost annual uncertainty surrounding it.
  • We believe that the provision’s impact could reach billions of dollars annually if it were made permanent or at least extended much longer than one or two years.



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