September 21, 2000 | Read Time: 1 minute
Congress is considering legislation that has a far-reaching provision long sought by non-profit organizations: Allowing people age 70½ and older to make tax-free withdrawals from individual retirement accounts for donations made directly to charities or through such planned gifts as charitable remainder trusts.
Under current federal law, Americans may withdraw funds without penalty from I.R.A.’s when they reach age 59½. But people are subject to income tax on the amount taken out, even if they give funds immediately to charity. Legislation approved by the Senate Finance Committee, H.R.1102, would allow people age 70½ and older to roll over I.R.A.assets directly to charities without having the funds count as taxable income. The provision would cost the federal government an estimated $1.7-billion in lost revenue over 10 years.
The bill approved by the Senate committee would also affect many non-profit groups and their employees by simplifying the administration and operation of tax-sheltered annuities — known as 403(b) retirement plans after the section of the code that governs them.
A detailed analysis of the bill, “The Retirement Security and Savings Act of 2000,” was prepared by the Joint Committee on Taxation and is available on the panel’s Web site, http://www.house.gov/jct.
