text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Legacy IRA Act''.
  
  SEC. 2. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR 
                CHARITABLE PURPOSES.
  
      (a) In General.--Paragraph (8) of section 408(d) of the Internal 
  Revenue Code of 1986 (relating to tax treatment of distributions) is 
  amended to read as follows:
              ``(8) Distributions for charitable purposes.--
                      ``(A) In general.--No amount shall be includible in 
                  gross income by reason of a qualified charitable 
                  distribution.
                      ``(B) Limitations.--
                              ``(i) In general.--The aggregate amount 
                          excluded from gross income by subparagraph (A) 
                          for a taxable year shall not exceed $400,000.
                              ``(ii) Organization and entity specific 
                          limitations.--The amount excluded from gross 
                          income by subparagraph (A) for a taxable year 
                          shall not exceed--
                                      ``(I) $100,000, in the case of any 
                                  distribution described in subparagraph 
                                  (C)(i)(I), and
                                      ``(II) $400,000, in the case of any 
                                  distribution described in subparagraph 
                                  (C)(i)(II).
                      ``(C) Qualified charitable distribution.--For 
                  purposes of this paragraph, the term `qualified 
                  charitable distribution' means any distribution from an 
                  individual retirement account--
                              ``(i) which is made directly by the 
                          trustee--
                                      ``(I) to a specified charitable 
                                  organization, or
                                      ``(II) to a split-interest entity, 
                                  and
                              ``(ii) which is made on or after the date 
                          that the individual for whose benefit the 
                          account is maintained has attained--
                                      ``(I) in the case of any 
                                  distribution described in clause 
                                  (i)(I), age 70\1/2\, and
                                      ``(II) in the case of any 
                                  distribution described in clause 
                                  (i)(II), age 65.
                      ``(D) Special rules relating to distributions.--For 
                  purposes of this paragraph--
                              ``(i) Distribution must be otherwise 
                          includible.--A distribution from an individual 
                          retirement account shall be treated as a 
                          qualified charitable distribution only to the 
                          extent that the distribution would be 
                          includible in gross income without regard to 
                          subparagraph (A).
                              ``(ii) Limitation on income interests.--A 
                          distribution from an individual retirement 
                          account to a split-interest entity may only be 
                          treated as a qualified charitable distribution 
                          if--
                                      ``(I) no person holds an income 
                                  interest in the split-interest entity 
                                  other than the individual for whose 
                                  benefit such account is maintained, the 
                                  spouse of such individual, or both, and
                                      ``(II) the income interest in the 
                                  split-interest entity is nonassignable.
                              ``(iii) Contributions must be otherwise 
                          deductible.--A distribution from an individual 
                          retirement account to a specified charitable 
                          organization may be treated as a qualified 
                          charitable distribution only if--
                                      ``(I) in the case of a distribution 
                                  to a charitable remainder annuity trust 
                                  or a charitable remainder unitrust, a 
                                  deduction for the entire value of the 
                                  remainder interest in the distribution 
                                  for the benefit of a specified 
                                  charitable organization would be 
                                  allowable under section 170 (determined 
                                  without regard to subsection (b) 
                                  thereof and this paragraph), and
                                      ``(II) in the case of a charitable 
                                  gift annuity, a deduction in an amount 
                                  equal to the amount of the distribution 
                                  reduced by the value of the annuity 
                                  described in section 501(m)(5)(B) would 
                                  be allowable under section 170 
                                  (determined without regard to 
                                  subsection (b) thereof and this 
                                  paragraph).
                      ``(E) Specified charitable organization defined.--
                  For purposes of this paragraph, the term `specified 
                  charitable organization' means an organization 
                  described in section 170(b)(1)(A) (other than any 
                  organization described in section 509(a)(3) or any fund 
                  or account described in section 4966(d)(2)).
                      ``(F) Split-interest entity defined.--For purposes 
                  of this paragraph, the term `split-interest entity' 
                  means--
                              ``(i) a charitable remainder annuity trust 
                          (as defined in section 664(d)(1)), but only if 
                          such trust is funded exclusively by a qualified 
                          charitable distribution,
                              ``(ii) a charitable remainder unitrust (as 
                          defined in section 664(d)(2)), but only if such 
                          unitrust is funded exclusively by one or more 
                          qualified charitable distributions, or
                              ``(iii) a charitable gift annuity (as 
                          defined in section 501(m)(5)), but only if such 
                          annuity is funded exclusively by a qualified 
                          charitable distribution and commences fixed 
                          payments of 5 percent or greater not later than 
                          one year from date of funding.
                      ``(G) Special rules.--
                              ``(i) Charitable remainder trusts.--
                          Notwithstanding section 664(b), distributions 
                          made from a trust described in clause (i) or 
                          (ii) of subparagraph (F) shall be treated as 
                          ordinary income in the hands of the beneficiary 
                          to whom is paid the annuity described in 
                          section 664(d)(1)(A) or the payment described 
                          in section 664(d)(2)(A).
                              ``(ii) Charitable gift annuities.--
                          Qualified charitable distributions made for a 
                          charitable gift annuity shall not be treated as 
                          an investment in the contract for purposes of 
                          section 72(c).
                              ``(iii) Application of section 72.--
                          Notwithstanding section 72, in determining the 
                          extent to which a distribution is a qualified 
                          charitable distribution, the entire amount of 
                          the distribution shall be treated as includible 
                          in gross income without regard to subparagraph 
                          (A) to the extent that such amount does not 
                          exceed the aggregate amount which would have 
                          been so includible if all amounts in all 
                          individual retirement plans of the individual 
                          were distributed during the taxable year and 
                          all such plans were treated as 1 contract for 
                          purposes of determining under section 72 the 
                          aggregate amount which would have been so 
                          includible. Proper adjustments shall be made in 
                          applying section 72 to other distributions in 
                          such taxable year and subsequent taxable years.
                              ``(iv) Determining deduction under section 
                          170.--Qualified charitable distributions shall 
                          not be taken into account in determining the 
                          deduction under section 170.
                              ``(v) Required minimum distributions.--The 
                          entire amount of a qualified charitable 
                          distribution shall be taken into account for 
                          purposes of section 401(a)(9).
                      ``(H) Termination with respect to split-entities.--
                  Subparagraph (A) shall not apply to a distribution to a 
                  split-interest entity after December 31, 2020.''.
      (b) Effective Date.--The amendment made by this section shall apply 
  to distributions made in taxable years ending after the date of the 
  enactment of this Act.
target: Legacy IRA Act  This bill amends the Internal Revenue Code to expand the tax exclusion for distributions from individual retirement accounts (IRAs) for charitable purposes.  The bill increases from $100,000 to $400,000 the annual limit on the aggregate amount of distributions for charitable purposes that may be excluded from the gross income of a taxpayer.  The bill permits tax-free distributions from IRAs to a split-interest entity until December 31, 2020. A split-interest entity is exclusively funded by charitable distributions and includes: a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity. A charitable gift annuity must commence fixed payments of at least 5% no later than one year from the date of funding.  A distribution to a split-interest entity may only be treated as a qualified charitable distribution if: (1) no person holds an income interest in the entity other than the individual for whose benefit the account is maintained, the spouse of such individual, or both; and (2) the income interest in the entity is nonassignable.  The bill limits the exclusion annually to: $100,000 for distributions to charitable organizations, and $400,000 for distributions to split-interest entities.  Tax-free distributions to a split-interest entity may be made when the account beneficiary attains age 65. (Under current law, the beneficiary must attain the age of 70-1/2 for IRA distributions to a charitable organization.) 
feat_title: Legacy IRA Act