Tax-Saving Opportunity for Donors Aged 70½+
Under the extended charitable IRA legislation, you can make charitable gifts now using funds from your individual retirement accounts (IRAs) without undesirable tax effects.
Previously you would have had to report any amount taken from your IRA as taxable income. You could then take a charitable deduction for the gift, but only up to 50 percent of your adjusted gross income. In effect, this caused some donors to pay more in income taxes than they would have if they hadn?t made a gift at all.
Fortunately, now these IRA gifts can be accomplished simply and without tax complications. Plus, you can make the gifts now—while you are living and able to witness the benefits of your generosity. This unique opportunity expires at the end of 2011.
You may contribute funds this way if:
- You are age 70½ or older at the time of the gift.
- The gifts total any amount up to $100,000 in 2011.
- You transfer funds directly from an IRA.
- You transfer the gifts outright to one or more qualified charities, but not to supporting organizations, or for gift annuities, charitable trusts or donor advised funds.
|Read why retirement plan assets are one of the most tax-wise gifts in our free guide.|
How the Extended Law Works
Pat, aged 80, has $450,000 in an IRA and has pledged to give Lewis & Clark $75,000 this year. If Pat transfers $75,000 to us directly from the IRA, she will avoid paying income tax on that amount. She cannot, however, claim a charitable deduction—it is a pure wash. Pat has found an easy way to benefit Lewis & Clark without tax complications. If Pat?s spouse has an IRA and is 70½ or older, he can also give up to $100,000 tax-free to a charity of his choice.
How to Make a Gift
Contact your IRA custodian soon to transfer your desired gift amount to Lewis & Clark.
For More Information
It is wise to consult tax professionals if you are contemplating gifts under the extended law. Please feel free to contact Sharon Bosserman-Benson for the Undergraduate or the Graduate School at 503-768-7911, 800-753-9292, or email@example.com, or the Law School development office at 503-768-6901 or firstname.lastname@example.org with any questions.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.