Home | Gift Planning | Tax-free IRA Transfers
Recent federal action has revived a way for those who hold significant assets in an Individual Retirement Account (IRA) to support KU Endowment. The Emergency Economic Stabilization Act of 2008 extends a provision that allows you to transfer money from an IRA to a qualified charity — without tax consequences. (Originally a provision of an earlier Act, this had expired at the end of 2007.)
Briefly, donors aged 70 ½ or older on the date of the distribution may give up to $100,000 each year from an IRA to a qualified charity such as KU Endowment. The provision is currently set to expire Dec. 31, 2009.
The distributions will not be subject to income tax, and the subsequent gifts will not be tax-deductible, making these “tax neutral” transactions.
The gifts may not involve any quid pro quos. In other words, they may not be used to receive priority points from KU Athletics, or for life income arrangements, such as gift annuities or charitable remainder trusts. The Act also specifically EXCLUDES gifts to donor-advised funds and supporting organizations.
Also, it is very important to note that these distributions must come directly from your IRA custodian to KU Endowment. If you take possession of the distribution and then make a gift, the withdrawal will become part of your adjusted gross income for the year.
This Act will most likely appeal to donors who want to make a gift to KU Endowment and who …
- … don’t need additional income; or
- … are already giving at their 50% deduction limit. These donors can now transfer up to $100,000 more from their IRA. This distribution will not be subject to deduction limitations, nor will it be taxed as income; or
- … are subject to the phaseout of their exemptions. This rule requires that itemized deductions be reduced when adjusted gross income exceeds certain levels. Distributions per the Pension Protection Act of 2006 do not increase adjusted gross income; or
- … don’t itemize their deductions, and who make a gift in an amount less than the standard deduction.
The Office of Gift Planning staff is ready to consult with you and/or your adviser about a tax-free IRA transfer to KU Endowment, and to help with any questions about other forms of charitable giving that may benefit you, your family and the University of Kansas.
The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.