Charitable IRA Rollover Renewed - Permanently!

On December 18, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015, which reinstated a number of expired tax provisions - among them the popular "Charitable IRA Rollover."

Here's what you need to know about the Charitable IRA Rollover:

• Unlike prior years, in which Congress extended the Charitable IRA Rollover just one year at a time, the PATH Act makes the Charitable IRA Rollover a permanent fixture of tax law.  No more wondering each year whether it would be renewed.
• IRA owners age 70 1/2 or older can make gifts to charity from their IRAs.  Any such gift, known under the law as a "qualified charitable distribution," is not taxable.  
• Since the IRA owner avoids paying tax on the distribution, there is no corresponding charitable deduction allowed.
• The distribution must be made directly from the IRA to the charitable organization.  If the IRA owner takes the distribution and then makes the gift to charity, that would not count as a "qualified" distribution and would be subject to tax.
• The distribution must be made to a "public" charity and not to a donor-advised fund or private foundation.  
• Qualified charitable distributions are limited to $100,000 per year.
• Qualified charitable distributions count toward the IRA owner's required minimum distribution ("RMD") for the year.
• If you made a distribution to charity direct from your IRA in 2015 prior to the law passing in the hopes that the Charitable IRA Rollover would be reinstated, you're in luck.  The PATH Act makes the Charitable IRA Rollover retroactive to January 1, 2015.
• If you have already taken your RMD for the year, you can still make a qualified charitable distribution in 2015, over and above your required minimum distribution.
• If you have not taken your RMD yet, you need to act quickly.  The distribution to charity - and your RMD - must be completed by December 31.

Now that the Charitable IRA Rollover has been made permanent, donors - in coordination with their CPAs and financial advisors - can plan ahead to make the best use of this powerful method to support their favorite causes.