by Andrew Hibel | Feb 17, 2015 | Charitable Alt-IRA, Donor-Advised Funds, Featured |
The Charitable IRA Rollover, also known as a qualified charitable donation or distribution, offers a tax advantaged way to donate to charity. It permits donors to gift up to $100,000 from their IRA to a public charity. But while popular, the Charitable IRA Rollover suffers from legislative and qualification limitations. Charitable IRA Rollover – Limited by Legislative Limbo Every one or two years since 2006 Congress has renewed the Charitable IRA Rollover, but donors and their financial advisors are never sure if it will happen. In 2014 it passed with two weeks left in the year – and only for tax year 2014. Proposed legislation in the House of Representatives would make the Charitable IRA Rollover provision permanent, but the Obama Administration has rejected similar bills in the past. Its legislative fate is uncertain. But even if the Charitable IRA Rollover becomes permanent, it still has limits the legislation does not propose to change. Charitable IRA Rollover Limits While popular, the Charitable IRA Rollover provision has restrictions limiting its appeal. Donors qualify for a Charitable IRA Rollover at age 70-1/2 or older. The provision limits contributions to $100,000 annually per person. Donors may not contribute to a donor-advised fund, supporting organization or private foundation (with the exception of a private non-operating foundation meeting conduit rules). Charitable Alt-IRA – a Better Alternative No matter what happens in Washington, the Charitable Alt-IRA technique offers many and perhaps most donors a better alternative than the Charitable IRA Rollover. More donors qualify for the Charitable Alt-IRA, with fewer downsides and more advantages. The technique involves contributing long-term appreciated securities to a donor-advised fund,...
