IRA Rollover and Other Retirement Gifts

Giving from your retirement plan as part of your estate plan

A retirement plan can be a tax-efficient and simple way of including the chapter in your estate plan. The best method is to name the chapter as a beneficiary on your plan’s beneficiary designation form. The tax advantage stems from the fact that most retirement plans (other than Roth IRAs) are subject to income taxes—and possibly estate taxes—if left to an individual beneficiary; however, a charity that is named as the beneficiary does not pay income or estate taxes on the distribution. Thus, the full value of what is distributed can be used by the chapter as a gift from your estate, supporting the purpose you designate.

To name the chapter as a beneficiary, you can obtain a beneficiary designation form from your IRA plan administrator. That form usually asks for the name of the beneficiary, its address, and a tax identification number. This will provide an unrestricted gift to the chapter.

IRA Charitable Rollovers

You also may be able to make a gift to charity with a distribution from your Individual Retirement Account (IRA), and take advantage of tax savings. Under The Protecting Americans from Tax Hikes Act of 2015, Americans over the age of 70½ can distribute up to $100,000 in a calendar year from an IRA to the chapter or other charities, tax-free. This distribution to charity can be a significant benefit for IRA owners who are required each year to take minimum required distributions, which are included in their gross income for income tax purposes.

If an IRA owner directs the IRA plan administrator to distribute any amount up to $100,000 to charity, the distribution counts toward the owner’s minimum required distribution, but is not included in his or her income for income tax purposes. Although the IRA owner is not entitled to a charitable deduction for the distribution, the distribution benefits charity. This option is known as the “IRA charitable rollover.”

Here’s How It Works:

You must be 70½ or older at the time of distribution.

  • You may distribute any amount up to $100,000 in a calendar year to charity, as long it is completed by December 31 of the year in which you intend to make the charitable distribution.
  • Your IRA administrator must make the distribution directly to the charity, or you may write a check payable to the charity from your IRA checkbook (special rules apply when a check is written from an IRA checkbook).
  • If you make a gift to the chapter from your IRA, please include written instructions on how you would like to designate your gift.

 

Learn how you can support your chapter by contacting Matt Noble of Fraternity Management Group at matt.noble@fmgtucson.com.