Charitable IRA Rollovers Made Permanent In Recent Extenders Bill

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the "Act"). The legislation made permanent or extended many of the tax provisions that had previously been extended two years at a time. Included in the Act was the opportunity for some donors to make significant charitable contributions using funds from individual retirement accounts ("IRAs") in 2015 and beyond. This Client Alert focuses on the IRA charitable rollover provision. These new provisions could provide significant tax benefits to IRA owners over the age of 70½.

Charitable Giving Through IRA Rollovers

The Act makes permanent a provision of the Internal Revenue Code allowing an individual age 70½ or older to make a tax-free "qualified charitable distribution" (in the form of a rollover) of up to $100,000 per year from an IRA to a qualified charity. As a result, an individual can avoid paying income tax on an otherwise taxable distribution from an IRA