This bill proposes a gross income tax exclusion for distributions made from individual retirement accounts (IRAs) to qualified charitable organizations. Specifically, it amends N.J.S.54A:5-1 and P.L.1998, c.57 to include provisions that allow for tax-exempt distributions from both Roth IRAs and traditional IRAs when these funds are donated to organizations recognized as tax-exempt under section 501(c)(3) of the federal Internal Revenue Code. The bill defines a "qualified charitable organization" and outlines the conditions under which distributions from these retirement accounts can be made without incurring state income tax.

The bill also clarifies the definitions of Roth IRAs and traditional IRAs, detailing the circumstances under which distributions from these accounts are considered "qualified." For Roth IRAs, qualified distributions include those made after the account holder reaches age 59 1/2, to beneficiaries after the account holder's death, or for specific purposes such as disability or first-time home purchases. The inclusion of distributions to qualified charitable organizations as a new category of qualified distribution aims to encourage charitable giving while providing tax relief to individuals making such contributions. The act is set to take effect immediately and will apply to taxable years beginning on or after January 1 of the year following its enactment.

Statutes affected:
Introduced: 54A:6-28