Life Income IRA Charitable Rollover Bill Introduced

There is a strong likelihood that a new bill permitting IRA rollovers to life income gifts will be passed this time by Congress.  If not this year, there is good hope for passage in 2017. Unlike prior versions of this bill that were unsuccessful, HR 5171, the Legacy IRA Act, has been favorably scored and has bipartisan support from key Congressional leaders.

The Legacy IRA Act was introduced on May 6 by House Ways and Means Committee Members Peter Roskam (R-IL), Earl Blumenauer (D-OR), Erik Paulsen (R-MN) and Pat Tiberi (R-OH). Kevin Cramer (R-ND) is also a lead cosponsor. If the Legacy IRA bill is passed, it will permit donors to make tax-free rollovers from their IRAs to fund charitable gift annuities and charitable remainder trusts (unitrusts and annuity trusts,) which is not allowed under the current rollover legislation.

Here are a few of the key provisions presently under consideration:

•An IRA owner age 65 or older could make a transfer to fund a Charitable Gift Annuity or Charitable Reminder Trust.

•Transfers of up to $400,000 may be made from an owner’s IRA to fund a life income plan.

•For individuals 70 ½ or older, there is a combined ceiling of $400,000 for direct gifts (limited to $100,000) and transfers from an IRA to fund a life income gift.

•The full amount qualifies for a donor’s required minimum distribution.

•There is a minimum 5% payout requirement. For Charitable Gift Annuities, if 5% is greater than the usual rate, the charity should not enter into a rollover arrangement. In other words, the same rules still apply.

•Income can be paid to an IRA owner and/or a spouse.

•The law sunsets (expires) after four years.

The bill has been favorably scored at a cost of $106 million over 10 years. Many of the provisions in this bill, including the 5% minimum payout provision, are included in an effort to maintain a sufficient level of federal tax revenue to make the bill attractive to Members of Congress.

The ability to make an IRA rollover to fund a life income gift is an idea that will be very appealing to many donors and could result in substantial future gifts to charitable organizations. It’s still up to Congress at this point, so don’t get too excited. But if it looks appealing to you, encourage legislators to co-sponsor and support this important bill.

Article appears as originally published in the Ohio Jewish Chronicle, Thursday October 13, 2016.

Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.


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