Special Report: House of Representatives Approves IRA Rollover

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On Wednesday, Dec. 3, the US House of Representatives passed a short-term tax extenders bill. The bill extended certain tax provisions for 2014, including the IRA Rollover, a provision long supported by the nonprofit sector. The package would cover 2014 but NOT apply to 2015 or beyond. The bill now goes to the Senate.

US Capitol by Glyn Lowe Photoworks via FlickrSen. Harry Reid (D-NV) has questioned whether the Senate will have time to pass the House bill before the end of the year. However, Sen. Ron Wyden (D-OR), Chair of the Senate Finance Committee, and the White House have shown a willingness to move forward with this one-year retroactive fix, according to Jason Lee, General Counsel at the Association of Fundraising Professionals.

For more information about the bill, click through to:

The Hill“House Approves Slate of Tax Breaks”

The Hill“Reid Indicates Senate Might Not Pass House Tax-Extender Bill”

The sad reality is that even if the tax extenders bill passes the Congress and is signed by Pres. Obama, there is precious little time for charities to take advantage of the IRA Rollover provision in 2014.

Looking forward to the next Congress, there is strong interest among Republicans to make the IRA Rollover permanent. However, a longer-term tax extenders package will likely meet with opposition from The White House. So, while the Obama Administration is not necessarily opposed to the IRA Rollover, the Rollover could run into problems simply because it’s part of a more problematic tax extenders package.

Even if such a package can pass the Congress, it will likely not do so with a sufficient margin to override a presidential veto. So, this all adds up to a great deal of uncertainty at the moment. Of course, we’re talking about the Federal Government, so anything can happen at any given time, or not.

If the IRA Rollover provision is adopted for 2014, will it matter much at all to the nonprofit sector?

What can/should charities do to prepare for last minute passage in case it happens?

Let me know what you think by commenting below.

That’s what Michael Rosen says… What do you say?


UPDATE (Dec. 9, 2014): The Obama Administration threatened to veto a current bill that would make permanent three charitable giving incentives: breaks for conservation easements, donations of food inventory, and donations directly from retirement accounts. However, there is still some hope that the IRA Rollover will be renewed for just 2014. Unfortunately, with the Congress scheduled to adjourn this week or next, time is running out. For more information, click here.

UPDATE (Dec. 9, 2014): For an interesting perspective on the IRA Rollover and its value to charities, checkout this post from Viken Mikaelian by clicking here.

UPDATE (Dec. 11, 2014): Today, the House of Representatives failed to pass HR 5806-The Supporting America’s Charities Act. The Act would have made permanent the following charitable giving provisions:  IRA Rollover, conservation easements, gifts from food inventories. The measure fell about 15 votes short of passage. Democrats were overwhelmingly opposed and the Obama Administration threatened a veto if Congress approved the bill. Now, we’ll have to wait and see if Congress approves the provisions for just 2014. However, time is running out with Congress set to adjourn this week or next.

UPDATE (Dec. 15, 2014): Let me say that the legislative process is often confusing, complicated, and surprising. So, allow me to try to sort things out a bit.

HR 5806-The Supporting America’s Charities Act: The Act would have made permanent the following charitable giving provisions: IRA Rollover, conservation easements, gifts from food inventories. This bill failed last week. All House Republicans voted in favor while Democrats were split. President Obama threatened a veto.

HR 5771-The Tax Increase Prevention Act of 2014: This bill is commonly known as The Tax-Extenders Package. The bill includes the same charitable giving incentives as HR 5806, but only for 2014, without any grace period. In addition, the bill contains other tax provisions. This measure passed the House on Dec. 3, 2014. It now awaits action by the Senate. However, it is uncertain that the Senate will vote on the measure prior to adjournment this week. If there is a vote and the bill does pass the Senate, it will go on to President Obama. The Obama Administration has signaled that it would NOT veto this measure, but that’s not a guarantee. You can track this bill by going to:

https://www.govtrack.us/congress/bills/113/hr5771 .

The Omnibus Spending Bill: Congress has approved a $1.1 trillion spending bill that keeps the government open through September. However, that measure does not deal with the tax extender issues including the charitable giving incentives.

So, where the IRA Rollover is concerned, we remain in legislative limbo.

UPDATE (Dec. 16, 2014): At 7:32 p.m. Eastern this evening (Dec. 16), the Senate passed H.R. 5771, the bill that retroactively extends several tax provisions, including the IRA Rollover. As noted previously, the bill will expire at the end of the year on Dec. 31, 2014 without any grace period. The bill now awaits the President’s signature.

6 Comments to “Special Report: House of Representatives Approves IRA Rollover”

  1. For however long the IRA Rollover is limping along on one- or two-year extenders it will always be advisable for anyone wanting to make a contribution from an IRA to have the check cut directly to the charity. This would qualify for the Rollover if it is retroactively extended and, if not, it would qualify for an ordinary deduction in most cases offsetting most of the included income.

    • Zach, thank you for sharing your advice. I believe that one of the primary benefits of the IRA Rollover is that it gives charities a reason to communicate with prospective donors about planned giving. Sadly, even if the bill passes this month, there will be little time for those conversations. If not this year, hopefully next year, Congress will get its act together and make certain tax rules, including the IRA Rollover provision, permanent so that people can make long-term financial plans with a greater degree of certainty. The current way that Congress does things now, making few rules permanent, is ridiculous and serves no one particular well. The more we can create certainty rather than uncertainty, the better it will be for individuals and the economy.

  2. There’s a residual of goodwill among those who have used the IRA rollover in the past, and some are watching and will be ready to act.

    • Ken, thank you for your good point. If the IRA Rollover is adopted in the 11th hour of 2014 for 2014, previous IRA donors might be willing to give from their IRA once again. Charities can reach out to those folks to encourage them to do so. While a broad outreach to promote a gift from an IRA might not make sense, a targeted appeal to past IRA donors might.

  3. We sent a communication to our donors informing them of the progress of the legislation, and encouraging them, if they wished to make a year end gift and if they wished to do so from their IRA, to initiate the transaction with their IRA custodian now. The rationale being that if they wait until the legislation does become effective, then it will most likely be too late.
    Now, I know what the more astute of you are thinking, “But Scott, what if it DOESN’T pass, then what?”
    The key phrases are, “if they wished to make a year end gift and if they wished to do so from their IRA”…….it is only in those instances where the IRA owner DOESN’T itemize, that there could potentially be some negative ramifications. This is a good time to point out that even if the legislation DOESN’T pass, it is still a good idea for donors, 59 1/2 and older, to make their charitable gifts from their IRA………..again with the caveat, “as long as they itemize.”

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