IRA “Charitable Rollover” Retroactively Extended Through 2014

December 2014

Background

As a part of the so-called "Cromnibus" bill, Congress has extended dozens of expired "temporary" tax breaks for 2014. Included in that group is a rule that allows for tax-free treatment of certain "qualified charitable distributions" from IRAs where the distributions are donated to charity. The bill only extends this tax break until December 31, 2014.

"Qualified Charitable Distribution"

Specifically, a taxpayer may exclude from gross income the aggregate amount of his or her "qualified charitable distributions" that do not exceed $100,000 in a tax year. A "qualified charitable distribution" is any otherwise taxable distribution from an IRA that is:

  1. made directly by the IRA trustee to a public charity (not a private foundation or donor advised fund at a public charity); and
  2. made on or after the date on which the IRA owner has attained age 70 1/2.

An IRA owner who makes an IRA qualified charitable distribution in an amount equal to his or her required minimum distributions ("RMDs") is considered to have satisfied his or her minimum distribution requirement for that year, even though a charitable entity (and not the IRA owner) receives the distribution.

The rule may be applied to IRA distributions made after December 31, 2013 and until December 31, 2014.

Short Window of Opportunity

Taxpayers must contact IRA administrators as soon as possible if they intend to take advantage of the tax-free distribution by year-end. IRA administrators may require several weeks to process rollovers.

It is currently unclear whether Congress will extend this provision to 2015 or beyond. If recent history is a reliable indicator, however, it is likely that a decision on that may not come until well into the next year.

This client alert is published by Dickinson Wright PLLC to inform our clients and friends of important developments in the field of estate planning. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in here.

FOR MORE INFORMATION CONTACT:

Eric W. Gregory practices in the area of employee benefits and is an Associate in Dickinson Wright’s Ann Arbor office. He can be reached at 734.623.1946 or fgregory@dickinsonwright.com.

Henry M. Grix practices in the area of estate planning and is a member in Dickinson Wright’s Troy office. He can be reached at 248.433.7548 or hgrix@dickinsonwright.com.

Judith Fertel Layne practices in the area of estate planning and is a member in Dickinson Wright’s Troy office. She can be reached at 248.433.7563 or jlayne@dickinsonwright.com.

Joan Cripe Skrzyniarz practices in the area of estate planning and is a member in Dickinson Wright’s Troy office. She can be reached at 248.433.7521 or jskrzyniarz@dickinsonwright.com.

Kevin M. Bernys practices in the area of estate planning and is a member in Dickinson Wright’s Troy office. He can be reached at 248.433.7234 or kbernys@dickinsonwright.com.

James P. Spica practices in the area of estate planning and is a member in Dickinson Wright’s Detroit office. He can be reached at 313.223.3090 or jspica@dickinsonwright.com.

Ralph Levy, Jr. practices in the area of estate planning and is Of Counsel in Dickinson Wright’s Nashville office. He can be reached at 615.620.1733 or rlevy@dickinsonwright.com.

Les Raatz practices in the area of estate planning and is a member in Dickinson Wright’s Phoenix office. He can be reached at 602.285.5022 or lraatz@dickinsonwright.com.

Robin L. Miskell practices in the area of estate planning and is a member in Dickinson Wright’s Phoenix office. He can be reached at 602.889.5329 or rmiskell@dickinsonwright.com.

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