Charitable Incentives in Proposed Legislation

Charitable Incentives in Proposed Legislation

News story posted in Legislative on 8 September 2000| comments
audience: National Publication | last updated: 18 May 2011
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Summary

The Senate Finance Committee unanimously approved the $27 Billion 5-year package of pension changes. If enacted, the Retirement Security and Savings Act of 2000 would, among other things, provide an exclusion from gross income for qualified charitable distributions from individual retirement accounts to (i) charities to which deductible contributions may be made; (ii) charitable remainder trusts; and (iii) pooled income funds, as well as for the issuance of charitable gift annuities.

PGDC SUMMARY:

If enacted, the Retirement Security and Savings Act of 2000 would, among other things, provide an exclusion from gross income for qualified charitable distributions from individual retirement accounts to (i) charities to which deductible contributions may be made; (ii) charitable remainder trusts; and (iii) pooled income funds, as well as for the issuance of charitable gift annuities. Only the individual retirement account owner or his or her spouse or a charity could hold an income interest in the charitable remainder trust, pooled income fund or charitable gift annuity. For purposes of determining the character of distributions from a charitable remainder trust, the trust would have to treat as ordinary income the portion of the individual retirement account distribution to the trust that would have otherwise been includible in income. The balance of the distribution would be treated as corpus. Similar rules would apply in determining the taxable portion of a payment from a charitable gift annuity.

A qualified charitable distribution would be any distribution from an individual retirement account which is made after age 70 1/2, which qualifies as a charitable contribution as described in Code Section 170(c) and which is made directly to the charity, charitable remainder trust, pooled income fund, or charitable gift annuity. Because of the exclusion, no charitable income tax deduction would be allowed. On the other hand, if the amounts so distributed would otherwise be nontaxable (such as a qualified distribution from a Roth IRA), the normal charitable deduction rules would apply.

If this legislation is enacted, these rules would generally be effective for distributions after December 31, 2000.


Download: Retirement Security and Savings Act of 2000 - Description of Bill & Finance Committee Approval - Adobe Acrobat PDF (166KB)

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