Special Tax Incentive for IRA Gifts
New temporary legislation allows donors aged 70½ and older to direct distributions of up to $100,000 per year from their IRAs and ROTH IRAs to Bigelow Laboratory, without incurring income tax on the withdrawal.
This is good news for people who want to make a charitable gift during their lifetime from their retirement assets, but have been discouraged from doing so because of the income tax penalty. The current provision is effective through the 2011 tax year only.
Frequently Asked Questions:
- Who qualifies? Individuals who are age 70½ or older at the time of the contribution (you have to wait until your actual 70½th birthdate to make the transfer).
- How much can I transfer? $100,000 per year.
- From what accounts can I make transfers? Transfers must come from your IRAs directly to Bigelow Laboratory. If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to Bigelow Laboratory.
- To what organizations can I make gifts? Tax exempt organizations that are classified as 501(c)(3) including Bigelow Laboratory
- Can I use the rollover to fund life-income gifts (charitable gift annuities, charitable remainder trusts, or pooled income funds)? No, these are not eligible.
- Can I use the rollover to fund donor advised funds or supporting organizations? No, these are not eligible.
- Can I use the rollover to support a particular purpose? As with all other gifts, you can direct your IRA Charitable Rollover gift as you see fit. However, you cannot direct your gift for a purpose from which you receive a personal benefit, goods, or services in return, such as a gala ticket, to purchase items at a silent auction, etc.
- How will Bigelow Laboratory count the gift? We will give you full credit for the entire gift amount.
- What are the tax implications to me? Federal: You do not recognize the transfer to Bigelow Laboratory as income, provided it goes directly from the IRA provider to us. However, you are not entitled to an income tax charitable deduction for your gift. State – Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this transfer as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their state income tax on the federal income or federal tax paid. Still other states have no income tax at all.
- Does this transfer qualify as my minimum required distribution? Once you reach age 70½, you are required to take minimum distributions from your retirement plans each year, according to a federal formula. IRA charitable rollovers count towards your minimum required distributions for the year.
- How do I know if an IRA charitable rollover is right for me? If you are at least age 70½ and you do not need the additional income necessitated by the minimum required distribution, OR your charitable gifts already equal 50% of your adjusted gross income, so you do not benefit from an income tax charitable deduction for additional gifts, OR You do not itemize deductions.
- What is the procedure to execute an IRA charitable rollover? To complete an IRA charitable rollover, the first step is to contact your IRA provider to learn their procedures.
Please note that Bigelow Laboratory cannot render tax or legal advice and we urge you to consult with your professional advisor about your situation before making a charitable gift.
For more information please contact:
Director of Advancement