On Dec. 16, 2014, Congress passed the “Tax Increase Prevention Act of 2014, (“TIPA”, or “the Act”), which the President has now signed into law. The Act extends a host of individual tax provisions, including non-taxable IRA transfers to eligible charities.
Taxpayers who are age 70 ½ or older can make tax-free direct distributions to a charity from an Individual Retirement Account (IRA) of up to $100,000 per year. These distributions aren’t subject to the charitable contribution percentage limits since they are neither included in gross income nor claimed as a deduction on the taxpayer’s return. Under pre-Act law, these rules didn’t apply to distributions made in tax years beginning after Dec. 31, 2013. TIPA retroactively extends this provision for one year so that it’s available for charitable IRA transfers made in tax years beginning before Jan. 1, 2015. Therefore, there are less than two weeks to complete a charitable IRA transfer!