FOR IMMEDIATE RELEASE
May 17, 2016
WASHINGTON, D.C. – Legislation authored by Congressman Kevin Cramer has been introduced to the House Ways and Means Committee by its Oversight Subcommittee Chairman Peter Roskam (R-IL). H.R. 5171, the LEGACY IRA, authorizes tax-free IRA rollovers on gifts which benefit charities and provide taxable retirement income for donors.
Cramer presented testimony on the LEGACY IRA before the Tax Policy subcommittee during a recent listening session sponsored by the Ways and Means Committee where tax policy ideas were heard from colleagues who are not members of the committee. Cramer has worked on charitable, benevolent and philanthropic projects throughout his career.
“Since its enactment in 2006, the charitable IRA rollover has helped millions of donors contribute to charities that feed the hungry, care for the sick, house the homeless, and provide countless other services for those in need,” Cramer said in his testimony.
Under current law, individuals age 70½ or older are allowed to make direct contributions from an IRA of up to $100,000 per year to public charities and to private operating and conduit foundations without having to report the IRA distributions as taxable income. Cramer voted for making this provision permanent in the PATH Act last December.
H.R. 5171 is bipartisan legislation that allows the annual ceiling on transfers from a donor’s IRA for a life-income plan to be $400,000, with the qualifying age being 65 or older. For individuals 70½ or older, the combined ceiling for direct and life-income transfers from their IRAs would be $400,000, with a $100,000 cap for direct transfers. The only authorized income beneficiaries of the life-income plans are the individual IRA owner, their spouse or both. At death, the assets in the plan go directly to the named qualified charity or charities and not to family members.
Cramer gave the example of the LEGACY IRA making it possible for a retired middle income donor at age 65 to make a $100,000 IRA contribution to an alma mater or charity that also provides for a charitable life income, such as an annuity. “This is good for the charity, good for the donor, good for the economy and good for the government,” he said.
Cramer said he believes the tax code should stand firmly on the side of those who give to their neighbors. “Having been involved in philanthropic causes throughout my adult life, I have personally experienced the power of giving and its ability to change lives and communities,” he said. “By empowering this new segment of charitable givers, the LEGACY IRA can expand the number of citizens who have a vested interest in the health and well-being of their communities.”