The Senate adopted legislation today to extend through 2010 a tax break to encourage older people to donate money from their individual retirement accounts to charity. The measure allows people age 70-1⁄2 and older to give up to $100,000 a year from their IRAs without having to pay taxes on the distribution.
The legislation would also ease rules governing employer contributions to defined-benefit pension plans, a move that would offer relief to charities whose plans have suffered investment losses during the economic downturn.
The provisions are part of a bill, HR 4213, that would also extend unemployment insurance and health benefits, small-business loan programs, aid to states, and a variety of tax cuts. It now moves to the House for approval.
The House of Representatives already voted in December to extend the IRA tax break, which expired at the end of 2009. Both the Senate and House bills would also extend tax provisions to encourage donations of property, food inventory, books to public schools, and computer equipment for educational purposes.
Current rules require employers that operate defined-benefit pensions plans — which provide specific amounts of money to retired employees — to repay within seven years losses suffered by the plans during the 2008 stock-market crash. The Senate bill would allow them to stretch out the payments to either nine or 15 years.
It would also exempt until 2017 certain charity pension plans — those receiving contributions from multiple employers such as affiliates of a national organization — from some requirements of the Pension Protection Act of 2006. That law increased the obligations of charities and other employers to guarantee they will have enough money to pay retired workers.
Nonprofit leaders have been pushing for pension relief, arguing that otherwise charities would be forced to divert money away from their programs at a time of growing need. Two members of Congress introduced a bill in the House to ease payment requirements in October, but it has not yet gone to a vote.
A summary of the Senate legislation is available on the Senate Finance Committee Web site.
