Updated: Jan 31, 2019
With the Pension Protection Act of 2006 IRC Code Section 408(d)(8) provided an annual exclusion from gross income up to $100,000 for any Qualified Charitable Distributions. The advantage of this code section removed the potential negative tax usually associated with charitable contributions funded with IRA withdrawals.
Closely held companies have many agreements, but one of the most important is a buy/sell or shareholders’ agreement.
The IRA Charitable Rollover provision was originally enacted as a temporary measure set to expire December 31, 2007. Each year thereafter, Congress temporarily extended the provision for another year. Throughout most of 2015, tax payers were left in the dark as to whether the provision would be extended for the year 2015 or not. When the Protecting Americans from Tax Hikes Act of 2015 (PATH) was passed on December 18, 2015, it provided for the IRA Charitable Rollover Provision on a permanent basis, retroactive back to January 1, 2015.
This provision over the years has shifted millions of dollars from IRAs into charities and was met with welcome arms by the philanthropic sector since planning was always up in the air as to whether Congress would extend the provision or not from year to year.
Now that it is a permanent provision, it will make planning much easier.