Legacy IRA Act

The American Heart Association is leading our charitable partners in support of the Legacy IRA Act. This bipartisan legislation will expand seniors’ opportunities for tax-free charitable gifts directly from Individual Retirement Accounts (IRA) to eligible charities, such as the AHA. 

Couple walking with dog

The current IRA charitable rollover in law allows taxpayers age 70½ or older to make tax-free charitable gifts of up to $100,000 per year directly from their Individual Retirement Accounts (IRA) to eligible charities, including the American Heart Association. 

Taxpayers who want to make charitable contributions of traditional IRA assets can suffer negative tax consequences. If IRA funds are transferred directly to a public charity, the donor has to report the IRA gift as ordinary income, taxable at regular rates. Donors can offset the increase in taxable income in part by claiming charitable deductions. This, however, poses several problems for would-be donors:

  • Typically, taxpayers can claim charitable deductions equal to 50-60 percent of their income in a given year (60% for cash and 50% for non-cash assets).  In 2021 due to COVID-19, taxpayers can claim charitable deductions equal to 100% of their adjusted gross income (AGI) when making a cash gift.
  • The value of possible itemized deductions can be further reduced by limits on itemized deductions for higher-income taxpayers.
  • Increases in federal adjusted gross income can increase state tax liabilities and, in some cases, cause more of the taxpayer’s Social Security income to be taxed.

The IRA charitable rollover allows eligible donors to exclude up to $100,000 per year in IRA gifts from their ordinary taxable income, removing these negative tax consequences.

AHA Position

The American Heart Association (AHA) is leading a national coalition of nearly 50 other charities to expand and build on the IRA charitable rollover, which has raised millions for charities and their missions the last few years. After the IRA charitable rollover was made permanent, the AHA saw a significant increase in gifts from traditional IRA assets. A 2020 report from FreeWill found this growth across the nonprofit sector. Nonprofits saw increase of IRA rollover gifts of 67% from 2018 to 2019. The average gift in 2019 was $7,900.  

The AHA and our charitable partners are advocating for the passage of the bipartisan Legacy IRA Act; introduced as S. 243 in the 117th Congress (H.R. 3832 and S. 1257 in previous Congress).This legislation would expand the IRA Charitable Rollover to seniors beginning at age 65, allowing them to make charitable donations with tax-free IRA rollovers through life-income plans such as charitable gift annuity or charitable remainder trust. The cap would be raised from $100,000 to $400,000.

This incentive for more middle-income seniors to give to charities from IRA accounts is timely as currently 10,000 Baby Boomers turn 70 every day. This makes 70 to 80-year-olds the fastest growing age bracket in the US. At the same time, this generation collectively holds more than $9 trillion in their retirement accounts. At the AHA, well over half of our loyal, annual donors are 70 or older. 

By incentivizing charitable giving, the Legacy IRA Act will allow the AHA to fulfill our mission to be a relentless force for a world of longer, healthier lives.

Status

The AHA is leading an effort supported by a wide array of other organizations in the charitable sector to build support for expansion of the IRA Charitable Rollover. In the 116th Congress, a modified version of the Legacy IRA Act was included in a larger retirement reform package supported by House Ways and Means Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX). If you have any questions or need advocacy support, please contact Emily Horowitz, Associate Government Relations Manager, at Emily.Horowitz@heart.org.

If you are interested in learning more about how to make an IRA charitable rollover gift, please go to our Charitable Contribution Page(link opens in new window).

Resources

National Letters of Support and Endorsements

Advocacy Materials

*Credit to the Council for Advancement and Support of Education for much of this language.