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IRA Charitable Rollover Included in Final Tax Bill - Provision Could Boost Giving by Billions Annually

(Dec. 17, 2010) The Association of Fundraising Professionals (AFP) today applauded the inclusion of the IRA (Individual Retirement Account) Charitable Rollover in the tax bill recently signed into law by the President, noting that the provision has been proven to work and could increase giving by billions every year.

The IRA Charitable Rollover, a part of the Middle Class Tax Relief Act of 2010, would allow donors age 70½ to exclude from their taxable income any IRA funds up to $100,000 that have been withdrawn and transferred to a charity when filing a tax return.  

The IRA Charitable Rollover expired at the end of 2009, and AFP has been working to see the provision put back into law. Before it sunset, the provision was estimated to have raised hundreds of million for charities across the country despite being in effect since just 2006.

The provision is extended through Dec. 31, 2011, in the Middle Class Tax Relief Act of 2010.  This extension also is retroactive, meaning that the tax benefits of the provision apply to any qualified donations made after Dec. 31, 2009.  The extension of the IRA Charitable Rollover also includes a special provision that allows taxpayers who make any qualified donations between Dec. 31, 2010, and Feb. 1, 2011, to deem that those donations were made on Dec. 31, 2010, for tax filing purposes.

“These tough economic times have hit a lot of charities very hard, with giving either flat or dropping, while demand for services rises tremendously,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “Tax incentives such as the IRA Charitable Rollover provision play a vital role in encouraging donors to make gifts, especially as the contribution amounts become larger. The rollover provision is a powerful and unique way that donors can make support charitable causes in their communities.”

While pleased at the rollover’s inclusion in the tax bill, AFP is committed to making this giving incentive even more conducive to donors and the giving public. AFP will be working with members of Congress to remove the $100,000 cap on gifts from IRAs and lower the age threshold for all such gifts from 70½ to 59½.

“The IRA Charitable Rollover has worked very successfully over the last few years, but it could be enhanced to encourage additional giving,” added Maehara. “We believe the provision’s impact could reach billions of dollars annually once the public becomes more familiar with it.”

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