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Renewal of Tax-Free Transfers to Charity by IRAs

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12.23.2014 | Advisory

Due to recent action by Congress and the President, certain owners of individual retirement arrangements (IRAs) have until Wednesday, December 31, 2014 to make tax-free transfers to eligible charities and have them count for the 2014 tax year. The Tax Increase Prevention Act, enacted Dec. 19, 2014, extended for 2014 the provision authorizing these qualified charitable distributions. The provision had expired at the end of 2013, but is retroactive to all qualifying transfers in 2014.

For this limited time, an IRA owner, who is 70½ or older, can directly transfer, tax-free, up to $100,000 to an eligible charity. This option can be used for distributions from IRAs, but not for distributions from employer-sponsored retirement plans, including SIMPLE IRA plans and simplified employee pension (SEP) plans. Note, also, that this benefit is not available for transfers to certain charities such as supporting organizations and donor advised fund programs.

There are several other provisions for individuals and businesses contained in the Act that are not discussed above. For more information on the details of this provision, and the other provisions, please contact Melissa McMorrow, chair of the Tax Department at Nutter McClennen & Fish LLP, at 617-439-2720 or your Nutter attorney.

This advisory is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

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