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Guidance about Making Charitable Donations from an IRA

Federal law allows those who are age 70 1/2 or older to make charitable gifts totaling up to $100,000 directly from their Individual Retirement Accounts (IRAs) to 501(c)(3) charities. For 2014, such direct transfers do not count as income for federal income tax purposes, but do apply toward your required minimum distribution from your IRA for the year.

What is the procedure to make a qualified charitable transfer from your IRA?
In order to be a tax-free transfer, your charitable distribution must be transferred directly from your IRA to the University of New Haven. Click here for a sample letter that you can print out, complete, and send to your IRA account administrator to initiate a distribution. After you have made arrangements for a transfer, please let us know so that we can watch for a check from your account administrator.

Who qualifies?
Individual owners of an IRA who are age 70 1/2 or older at the time of the contribution. (You have to wait until the date of your actual 70 1/2 birthday to make the transfer.)

How much can I transfer?
Up to $100,000 per individual in 2014. Married couples who file jointly can each transfer up to $100,000 from their individual accounts.

To what charities can I make gifts?
You may make IRA transfers to tax-exempt organizations that are classified as 501(c)(3) charities, including the University of New Haven, to which deductible contributions can be made.

From what accounts can I make transfers?
Transfers must come from your IRA directly to the University of New Haven. If you have retirement assets in a 401(k), 403(b), or other retirement plan, you must first roll those funds into an IRA, and then you can instruct the IRA administrator to transfer the funds from your IRA directly to UNH.

Does an IRA charitable transfer count towards my minimum required annual distribution?
Once you reach 70 1/2, you are required to take minimum distributions from your retirement plans each year, based on a federal formula. IRA charitable transfers count toward your minimum required distributions for the year.

Can I use the IRA transfer to support a particular purpose at the University of New Haven?
As with all other gifts to UNH, you can choose the purpose of your IRA charitable transfer. 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 UNH 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 UNH as income, provided the funds are transferred directly from your IRA to UNH. You are not entitled to any income tax charitable deduction for your gift, but because you do not pay income tax on the amount withdrawn from your IRA, your net after-tax cost of the donation may be the same as if it were a tax-deductible gift.
  • State — Because each state has different laws, you will need to consult with your own tax advisors. Since Connecticut income tax is based on federal adjusted gross income and would not include a qualified transfer from your IRA as taxable income, such a qualified transfer will result in a lower Connecticut income tax obligation than would occur if you withdrew money from your IRA and made a charitable donation from your income.

 

Can I use an IRA transfer to fund a life income gift (such as a charitable gift annuity or charitable remainder trust)?
No, these are not eligible transfers.

Can I make an IRA transfer to a donor advised fund or a supporting organization?
No, these are not eligible transfers.

How do I know if an IRA charitable transfer is right for me?
You are at least 70 ½; you have not yet taken all of your required minimum distribution, or would like to transfer an additional amount from your IRA, and

  • You do not need the additional income from the required minimum distribution, or
  • Your charitable gifts already equal 50% of your adjusted gross income, so you will not benefit from an income tax charitable deduction for any additional gifts, or
  • You do not itemize deductions

 

The material presented here is general in nature and is not offered as legal or tax advice. The impact of a gift will vary based on individual circumstances. You are urged to seek the advice of your tax advisor, attorney, and/or financial planner to make certain that a gift that you are contemplating fits well into your overall financial circumstances and planning.

The University of New Haven's tax identification number (EIN) is 06-0761704.

For more information, contact:

Bob Congdon, director of development, at (203) 479-4295 or rcongdon@newhaven.edu.

  1. Office of Advancement

    University of New Haven
    300 Boston Post Road
    West Haven, CT 06516

    Bob Congdon
    Director of Development
    (203) 479-4295
    www.newhaven.edu/givenow