Retirement Assets
IRA Gifts Extended Through 2013!
Congress has extended through 2013 the legislation which allows donors to make tax-free gifts from their IRA Accounts. If you are age 70½ or older and do not need all or a part of the distributions from your IRA, you can make tax-free gifts totaling up to $100,000 in 2012 and 2013 from your traditional IRA to qualified charities until December 31, 2013. If your spouse has a separate IRA account, you may each make a gift up to $100,000. While you cannot claim a charitable deduction for IRA gifts, your gift amount will reduce your taxable estate, and you will not be required to pay federal income tax on any amounts you distribute to qualified charities.
ALERT: Because Congress acted after the close of the tax year, individuals can complete an IRA Rollover through January 31, 2013 and still elect to have it count it as a 2012 IRA Charitable Rollover.
Qualified charitable distributions:
- Can total up to $100,000 in each tax year (if your spouse has a separate IRA account, you can each contribute up to $100,000 per tax year);
- Can be excluded from your gross income for federal income tax purposes, however no charitable deduction is available;
- Are not subject to limitations on your itemized deductions.
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One of the simplest and most "tax wise" ways to make a gift to Stephens College is through your IRA, 401(k), 401(b) or other qualified retirement plan. You can name Stephens as the direct or contingent beneficiary of all or a percentage of your plan. A simple fund agreement between you and the College will ensure that Stephens uses the money according to your wishes.
There are two major benefits to using retirement assets to fund a charitable gift. First, you will avoid federal estate taxes on the value of the assets that pass to Stephens. In addition, heirs are subject to income taxes when they receive distributions from retirement plans. Designating Stephens as beneficiary bypasses these taxes.
Example:
Marie has an 401(k). She does not want to leave the funds to her family members because she knows they will have to pay income tax on any distributions from the 401(k). Marie decides to name Stephens as the beneficiary of her 401(k). Upon her death, the funds in the account will transfer to Stephens. She will avoid paying estate taxes on the value of the account and make a generous gift to Stephens in the process.
