IRA Charitable Rollover

Date Posted: 11/27/2017
Last Updated: 5/30/2024

On March 4, the N.C. House of Representatives overwhelmingly approved an amendment to  a bill (S.20) that would have protected the state tax treatment of charitable contributions that seniors make from their individual retirement accounts (IRAs). Thanks to Rep. Rick Catlin (R-New Hanover) for sponsoring the amendment, which passed by a 109-7 vote.

In spite of this change, however, the final version of S.20 that emerged from a House-Senate conference committee and ultimately became law with Governor McCrory's signature changes the way contributions made to nonprofits from IRAs last year are treated for state tax purposes. Under the bill, individuals aged 70 ½ and older who made tax-free (for federal purposes) distributions to nonprofits from their IRAs in 2014 must count these distributions as income on their state taxes, but can claim a tax deduction for the amount of the contribution. The proposal was part of a larger bill that also changes state gas tax rates, among other things.

As enacted, this proposal could create new taxes on North Carolina retirees who contributed to nonprofits from their IRAs last year. It could also set a precedent of diminishing incentives for charitable giving.