Will The Charitable Rollover Actually Rollover in Virginia?

IRA rolling along

Our reader is asking about a popular tax provision known as a "qualified charitable distribution," or what is sometimes  referred to as an IRA "charitable rollover." Charities have long supported it enthusiastically because they view it as a powerful charitable-giving incentive for older taxpayers. But the law expired at the end of 2013, and nobody knows what action, if any, Congress will take this year.

We are well into 2014. Consequently, that also means we are well into the 2013 tax season and planning for the upcoming year. As many retirees and their advisors review changes in the tax laws and begin their planning, they have one important question in common: “Will Congress revive the IRA charity rollover?”

Coincidentally, these taxpayers and advisors will be interested in a recent article in The Wall Street Journal titled “Will Congress Revive the IRA Charity Rollover?

Why all the buzz? The IRA charity rollover is a well-loved tool that creates a win-win for retired taxpayers and the charities they support. Unfortunately, it has never been a permanent part of the tax code and was just one those many provisions of the tax code that bit the dust at the end of last year.

What is an IRA charity rollover? It allows a taxpayer who is already required to take “Required Minimum Distributions” to direct their required distribution directly into the hands of charity. As a result, the taxpayer pays no income taxes on the distribution and the charity enjoys 100% of the distribution tax-free. What is not to like about that?

With the IRA charity rollover gone, retirees and their advisors now have to shift their priorities and tools to minimize the tax bite and still accomplish all of their financial goals.   Alternatively, you take the author’s lead and try waiting to see if Congress reinstates this beloved option.  Will Congress revive the IRA charity rollover? That is the question.

You can learn more about this topic as well as other strategies on our website under the tab entitled: charitable planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference: The Wall Street Journal (January 25, 2014) “Will Congress Revive the IRA Charity Rollover?



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