Legacy IRA Act
This bill amends the Internal Revenue Code to expand the tax exclusion for distributions from individual retirement accounts (IRAs) for charitable purposes.
The bill increases from $100,000 to $400,000 the annual limit on the aggregate amount of distributions for charitable purposes that may be excluded from the gross income of a taxpayer.
The bill permits tax-free distributions from IRAs to a split-interest entity for four years after the enactment of this bill. A split-interest entity is exclusively funded by charitable distributions and includes: a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity. A charitable gift annuity must commence fixed payments of at least 5% no later than one year from the date of funding.
A distribution to a split-interest entity may only be treated as a qualified charitable distribution if: (1) no person holds an income interest in the entity other than the individual for whose benefit the account is maintained, the spouse of such individual, or both; and (2) the income interest in the entity is nonassignable.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1257 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 1257
To amend the Internal Revenue Code of 1986 to expand tax-free
distributions from individual retirement accounts to include rollovers
for charitable life-income plans for charitable purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 30, 2019
Mr. Cramer (for himself and Ms. Stabenow) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand tax-free
distributions from individual retirement accounts to include rollovers
for charitable life-income plans for charitable purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Legacy IRA Act''.
SEC. 2. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR
CHARITABLE PURPOSES.
(a) In General.--Paragraph (8) of section 408(d) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(8) Distributions for charitable purposes.--
``(A) In general.--No amount shall be includible in
gross income by reason of a qualified charitable
distribution.
``(B) Limitations.--
``(i) In general.--The aggregate amount
excluded from gross income under subparagraph
(A) with respect to all qualified charitable
distributions for a taxable year shall not
exceed $400,000.
``(ii) Split-interest entities.--The
aggregate amount excluded from gross income
under subparagraph (A) for a taxable year with
respect to distributions described in
subparagraph (C)(i)(I) shall not exceed
$100,000.
``(C) Qualified charitable distribution.--For
purposes of this paragraph, the term `qualified
charitable distribution' means any distribution from an
individual retirement account--
``(i) which is made directly by the
trustee--
``(I) to a specified charitable
organization, or
``(II) to a split-interest entity,
and
``(ii) which is made on or after the date
on which the individual for whose benefit the
account is maintained has attained--
``(I) in the case of any
distribution described in clause
(i)(I), age 70\1/2\, and
``(II) in the case of any
distribution described in clause
(i)(II), age 65.
``(D) Special rules relating to distributions.--For
purposes of this paragraph--
``(i) Distribution must be otherwise
includible.--A distribution from an individual
retirement account shall be treated as a
qualified charitable distribution only to the
extent that the distribution would be
includible in gross income without regard to
subparagraph (A).
``(ii) Limitation on income interests.--A
distribution from an individual retirement
account to a split-interest entity shall be
treated as a qualified charitable distribution
only if--
``(I) no person holds an income
interest in the split-interest entity
other than the individual for whose
benefit such account is maintained, the
spouse of such individual, or both, and
``(II) the income interest in the
split-interest entity is nonassignable.
``(iii) Contributions must be otherwise
deductible.--A distribution from an individual
retirement account to a specified charitable
organization shall be treated as a qualified
charitable distribution only if--
``(I) in the case of a distribution
to a charitable remainder annuity trust
or a charitable remainder unitrust, a
deduction for the entire value of the
remainder interest in the distribution
for the benefit of a specified
charitable organization would be
allowable under section 170 (determined
without regard to subsection (b)
thereof and this paragraph), and
``(II) in the case of a charitable
gift annuity, a deduction in an amount
equal to the amount of the distribution
reduced by the value of the annuity
described in section 501(m)(5)(B) would
be allowable under section 170
(determined without regard to
subsection (b) thereof and this
paragraph).
``(E) Specified charitable organization.--For
purposes of this paragraph, the term `specified
charitable organization' means an organization
described in section 170(b)(1)(A) (other than any
organization described in section 509(a)(3) or any fund
or account described in section 4966(d)(2)).
``(F) Split-interest entity.--For purposes of this
paragraph, the term `split-interest entity' means--
``(i) a charitable remainder annuity trust
(as defined in section 664(d)(1)), but only if
such trust is funded exclusively by qualified
charitable distributions,
``(ii) a charitable remainder unitrust (as
defined in section 664(d)(2)), but only if such
unitrust is funded exclusively by qualified
charitable distributions, or
``(iii) a charitable gift annuity (as
defined in section 501(m)(5)), but only if such
annuity is funded exclusively by qualified
charitable distributions and commences fixed
payments of 5 percent or greater not later than
1 year from the date of funding.
``(G) Special rules.--
``(i) Charitable remainder trusts.--
Notwithstanding section 664(b), distributions
made from a trust described in clause (i) or
(ii) of subparagraph (F) shall be treated as
ordinary income in the hands of the beneficiary
to whom the annuity described in section
664(d)(1)(A) or the payment described in
section 664(d)(2)(A) is paid.
``(ii) Charitable gift annuities.--
Qualified charitable distributions made to fund
a charitable gift annuity shall not be treated
as an investment in the contract for purposes
of section 72(c).
``(iii) Application of section 72.--
Notwithstanding section 72, in determining the
extent to which a distribution is a qualified
charitable distribution, the entire amount of
the distribution shall be treated as includible
in gross income to the extent that such amount
does not exceed the aggregate amount which
would have been so includible if all amounts in
all individual retirement plans of the
individual were distributed during the taxable
year and all such plans were treated as 1
contract for purposes of determining under
section 72 the aggregate amount which would
have been so includible. Proper adjustments
shall be made in applying section 72 to other
distributions in such taxable year and
subsequent taxable years.
``(iv) Determining deduction under section
170.--Qualified charitable distributions shall
not be taken into account in determining the
deduction under section 170.
``(v) Required minimum distributions.--The
entire amount of a qualified charitable
distribution shall be taken into account for
purposes of section 401(a)(9).
``(H) Termination with respect to split-interest
entities.--Subparagraph (A) shall not apply to a
distribution to a split-interest entity in taxable
years beginning after the date which is 4 years after
the date of the enactment of the Legacy IRA Act.''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made in taxable years ending after the date of the
enactment of this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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