HUTCHINSON, Kan. – On Dec. 19, 2014, President Obama signed H.R.5771 into law, which renews the Charitable IRA 
provision of 2006, making it easier for Americans to give to causes they care about. This provision has the power to help local charities strengthen their communities by allowing individuals to roll over up to $100,000 from an Individual Retirement Account (IRA) to charity without being federally taxed.
This extension expires Dec. 31, 2014. Millions of Americans continue to save pre-tax dollars in their IRAs. The law allows taxpayers 70 ½ and older to share their wealth by giving retirement savings directly to charity—and bypassing income tax. This law is important to local charities operating as agents of philanthropy, including the Hutchinson Community Foundation, in order to continue to build community and improve social service programs that benefit people every day. This tax benefit will expire at the end of 2014.
“It is a win-win—for people who would rather give to charity than pay taxes and for the nonprofit organizations they choose to support,” Aubrey Abbott Patterson, Hutchinson Community Foundation president, said. Thanks to decades of deliberate saving, some of today’s retirees have more money in their IRAs than they need for daily living expenses and long-term care. Charitable individuals and couples have expressed an interest in giving the funds to charity, but income tax must be paid on all withdrawals, which reduces the value of the gift. Others are concerned about designating their children as IRA beneficiaries, since that may draw unintended tax consequences. “For larger estates, a good portion of IRA wealth goes to estate taxes and income taxes of beneficiaries,” Patterson said. “Experts estimate heirs may receive less than 50 percent of IRA assets that pass through estates.”
A provision in the federal law extends this special option: transferring IRA assets directly to charity. By going directly to a qualified public charity, the money is not included in the IRA owner’s income and—most important—is not taxed, preserving the full amount for charitable purposes.
“This really is a powerful and limited opportunity. The window is open now, but will close at the end of the year,” Patterson said. “For anyone interested in establishing a permanent legacy in this community, this is the opportunity of a lifetime to make the gift of a lifetime. I’m happy to help those who need it, but talking with your professional adviser as soon as possible is a very important step.”