Friday, August 04, 2006

Charitable Tax Incentives included in Senate Pension Bill

WASHINGTON – Sen. Chuck Grassley today won final Senate approval of his bill that broadly reforms pension plans and, like many other House and Senate Bills, contains other legislation that may or not be related to the original intent of the Bill. Included in the Senate Pension Bill are provisions that provide additional tax incentives that should help charities.

Chief among the charitable tax incentives included in the pension reform bill (H.R. 4) is an IRA rollover provision that allows individuals age 70 ½ and older to make charitable donations up to $100,000 from an IRA without having to count the donation as taxable income. This provision, while highly contested, has broad applicablity for two years, allowing the charitable community to demonstrate its value as an incentive for increased giving that could be either eliminated or expanded in the future. The bill also provides expanded tax deductions for contributions of book and food inventory and qualified conservation contributions. The bill does not include a charitable deduction for taxpayers who do not itemize.

The IRA rollover provision, as well as other recommendations were identified by work accomplished in part by ECFA involvement in the "Panel on the Nonprofit Sector". The Panel was an independent effort by charities and foundations that included twenty top executives and national leaders including ECFA President Emeritus, Paul Nelson.

The work of the Panel was welcomed and encouraged by Sen. Chuck Grassley, Republican of Iowa and the Chairman of the influential Senate Finance Committee. The reforms were part of comprehensive legislation Grassley also helped to draft that will shore up the nation’s pension funding for workers nationwide.

The bill is considered by many to be the most comprehensive reform of pension funding laws since 1974. Developed in large part through the Senate Finance Committee, which Grassley chairs, it contains a number of reforms to shore up pension funding. A major change includes changing the formula companies must use to contribute to their pension plans. The bill also increases the amount of fees companies must pay to the Pension Benefit Guaranty Corporation, which guarantees pension funding if companies can no longer afford their contributions.

The Senate passed the bill by a 93 to 5 vote. It now goes to President Bush for his signature.

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