On December 16, 2014, the Senate passed H.R. 5771, the Tax Increase Prevention Act of 2014 and the President is expected to sign the Act into law.  This Act will renew, retroactively, certain tax provisions that expired at the end of 2013.  The renewal is for one calendar year only.

Under this Act, an individual taxpayer who is at least 70 ½ years old may make a tax-free contribution to a qualified public charity from his or her individual retirement account (IRA) of up to $100,000 in the year 2014.  If you are at least 70 ½ years old and are considering making charitable contributions this year, you should consider doing so by making distributions from your IRA and you may do so before year end before incurring tax on the first $100,000 of these distributions.

The distribution must be made directly from your IRA provider to the charity.  Such a direct gift from an IRA to a charity will not be taxable income to you as a taxpayer, nor will you receive a charitable deduction.  Generally making this type of directed gift from an IRA to a public charity is more tax efficient than withdrawing the funds from the IRA, recognizing income and then making a deductible charitable contribution from those proceeds.

Note that you must act to make this contribution before midnight on December 31, 2014 in order for the charitable distribution to be tax-free to you.  You should contact your financial advisor as soon as possible if you would like to consider making such a gift.

If you have questions or if we can be of assistance, please contact: Stacey Willits McConnell, Esquire.Chair of Lamb McErlane’s Estate Planning and Trusts Department.Wills, Estate Planning and Trust Attorney West Chester, PA
610.701.4431  |  smcconnell@lambmcerlane.com

At Lamb McErlane Ms. McConnell concentrates her practice in estate planning, administration of trusts and estates, charitable giving, and sophisticated wealth preservation and transfer techniques. Stacey is a member of Board of Trustees of The Episcopal Academy, serves on the Board of Directors for The Chester County Community Foundation and Main Line Animal Rescue.  She is also a member of the Philadelphia Estate Planning Council. She is a graduate of Duke University, Stetson College of Law and the Graduate Tax Program at Boston University School of Law.