Bill > S3780

Introduced Session

This bill provides a gross income tax exclusion for distributions from a Roth IRA or a traditional IRA that are made to a qualified charitable organization. A Roth IRA is a type of tax-advantaged individual retirement account that allows account holders to contribute after-tax dollars towards retirement. Contributions made to the account grow tax-free while qualified withdrawals, also known as distributions, may be made without incurring income tax liability, provided certain conditions are met. Qualified distributions from a Roth IRA currently include amounts paid or distributed: (1) on or after the date the account holder attains 59 1/2 years of age; (2) to a beneficiary, or if a beneficiary has not be designated, to the estate of an account holder on or after their death; (3) for reasons attributable to the account holder's disability; or (4) as a qualified first time home buyer distribution. Distributions made for a non-qualified purpose are subject to taxes and penalties. A traditional IRA is another type of tax-advantaged individual retirement account that allows account holders to direct pre-tax income toward investments that can grow tax-deferred until the funds are withdrawn, at which point the money is treated as ordinary income and is subject to income tax. In limited circumstances, certain interest, dividends and other earnings credited to an IRA can be withdrawn tax-free, provided those earnings are from investments in government debt obligations, such as bonds issued by the federal government, the State, or local governments. For the purposes of the bill, a "qualified charitable organization" is a charitable organization that receives tax exempt status pursuant to section 501(c)(3) of the federal Internal Revenue Code. Typically, organizations that receive this exemption are those operating exclusively for charitable, religious, scientific, literary, educational, testing for public safety, or other specified purposes. Accordingly, the bill provides that distributions made from a Roth IRA or a traditional IRA to these organizations would be exempt from State income tax.

Committee Categories

Jon Bramnick (R)*,  Patrick Diegnan (D), 

Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee (on 10/10/2024)

Official Document