Statements on Introduced Bills and Joint Resolutions - S. 209

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

Mr. DURBIN. Mr. President, I am pleased to introduce, along with Senator KAY BAILEY HUTCHISON, the charitable IRA Rollover Act of 2003. We have introduced this legislation in the last two Congresses. Senator HUTCHISON and I sincerely hope that this legislation will finally become law this year.

The IRA Charitable Rollover Act has the support of numerous charitable organizations across the United States. The effect of this bill would be to unlock billions of dollars in savings Americans hold and make them available to charities. Our legislation will allow individuals to roll assets from an Individual Retirement Account into a charity or a deferred charitable gift plan without incurring any income tax consequences. Thus, the donation would be made to charity without ever withdrawing it as income and paying tax on it.

Americans currently hold about $2 trillion in assets in IRAs. This represents over one-fifth of Americans' total retirement market assets and will likely grow due to the increased contribution limits enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001. Recent studies show that assets of qualified retirement plans, such as IRAs, comprise a substantial part of peoples' net worth. Many of these individuals would like to give a portion of these assets to charity, but are reluctant to do so because of the tax consequences.

Under our current law, if money from an IRA is transferred to a charitable organization or into a charitable remainder trust, donors are required to recognize that as income. Therefore, absent the changes called for in the legislation, the donor will have taxable income in the year the gift is funded. This is a huge disincentive contained in our complicated and burdensome tax code. This legislation will unleash a critical source of funding for our Nation's charities. This legislation will provide millions of Americans with a commonsense way to remove obstacles to private charitable giving.

Under the Hutchison-Durbin plan, an individual, upon reaching age 59½, could move assets penalty- and tax-free from an IRA directly to charity or into a qualifying deferred charitable gift plan—e.g. charitable remainder trusts, pooled income funds and gift annuities. In the latter case the donor would be able to receive an income stream from the retirement plan assets, which would be taxed according to normal rules. Upon the death of the individual, the remainder would be transferred to charity tax free.

There are numerous supporters of this legislation including the Art Institute of Chicago, the University of Chicago, the Field Museum, the Catholic Diocese of Peoria, Northwestern University, the Chicago Symphony Orchestra, Georgetown University, and others. There are over 100 groups in Illinois alone that support this sensible legislation.

I hope the Senate will join in this bipartisan effort to provide a valuable new source of philanthropy for our Nation's charities. I hope that our colleagues will cosponsor this important piece of legislation and that it will be enacted into law this year. I thank the Senator from Texas, Senator HUTCHISON, for working with me and my staff in this effort.