Make a Tax-Free Gift From Your IRA

Nov 5, 2013

Now through December 31, 2013,  individuals aged 70 ½ or older can make charitable gifts to qualified organizations through direct transfers from their IRAs without paying income tax on the IRA distributions. You can improve your overall tax situation while helping VPR, our public service mission, and vision for the future.

You can make a direct transfer if:

  • You are age 70 ½ or older on the day of the gift.
  • You transfer directly from your IRA. This opportunity applies only to IRAs and not other types of retirement plans.
  • You transfer the funds outright to one or more qualified charities.
  • You make your gift by December 31, 2013.

Benefits of an IRA Direct Transfer to a Charitable Organization

  • The transfer generates neither taxable income nor a tax deduction, so you can benefit even if you do not itemize your tax deductions
  • The transfer may count towards your required minimum distribution
  • You may transfer up to $100,000 directly from your IRA, which allows you to make a significant gift and gives you the flexibility to create an improved tax situation
  • Along with creating a powerful legacy, you can witness the benefits of your gift now
  • It’s simple to do. Just call your IRA administrator to make the transfer or you can request a letter template to submit to your administrator by calling Brian Tagliaferro at 802-654-4388 or emailing btagliaferro@vpr.net

Frequently Asked Questions

Q. I've already named VPR as the beneficiary of my IRA. What are the benefits if I make a gift now instead of after my lifetime?

A. By making a gift this year of up to $100,000 from your IRA, you can see your philanthropic dollars at work. You are jump-starting your legacy and giving yourself the joy of watching your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have already made by transferring that amount from your IRA.

Q. I'm turning age 70½ in a few months. Can I make this gift now?
A. No. The legislation requires you to reach age 70½ by the date you make the gift.

Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes. Under the legislation, gifts can be made from IRAs. Pension, profit sharing, 401(k), 403(b) and other forms of retirement funds do not fall under this tax legislation.

Q. Can my gift be used as my minimum required distribution under the law?
A. Yes, absolutely. If you have not yet taken your required minimum distribution, the charitable IRA rollover gift can satisfy all or part of that requirement. Contact your IRA custodian to complete the gift.

Q. Do I need to give my entire IRA to be eligible for the tax benefits?
A. No. You can give any amount under this provision, as long as it is $100,000 or less this year. If your IRA is valued at more than $100,000, you can transfer a portion of it to fund a charitable gift.

An Option for Giving Later

If an outright gift from your IRA isn’t right for you, consider making VPR beneficiary of your IRA or other retirement assets. In most cases, the government defers tax on the income used to fund your IRA. After your lifetime, these funds are subject to income taxes, which can eat up to 39.6% of the value of your IRA. Estate taxes could consume more.

By naming VPR or another organization as beneficiary of these funds, the entire amount you designate will be gifted exempt from tax. Also as a result of the gift, your heirs may inherit more assets and pay less in taxes.

It is always advisable to discuss your plans with your professional advisor to be certain the best plan for you. In addition we are happy to answer any questions you might have. Contact Brian Tagliaferro at 802-654-4388 or btagliaferro@vpr.net.