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Information on the IRA Charitable Rollover

There are many ways to make gifts to the University of Wyoming. Now, with federal legislation that was made permanent in 2015, an IRA charitable rollover is an option that makes it even easier for donors like you to support UW while saving big at tax time.

WHY?

Why would you want to make a charitable gift with your IRA minimum distribution? If you are using your disbursements for basic living expenses, most likely this is not for you. However, if you face higher taxation, taking advantage of this option may help you tremendously while also fulfilling your charitable giving goals.

THE RULES

The Protecting Americans from Tax Hikes Act of 2015 made permanent the IRA charitable rollover provisions that were allowed on a year-to-year basis in the past. As a result, donors who are at least 70½ years old are eligible to make gifts of up to $100,000 to qualified charitable organizations, including the University of Wyoming, through direct transfers from their individual retirement accounts. This kind of transfer will satisfy all or part of the required minimum distribution. Probably the most important part of this process is that transfers must come directly from an IRA custodian to the charity.

When the gift comes directly from the IRA custodian, it becomes a non-taxable event—which means that a donor will not realize any income but will also not receive a charitable deduction. The charitable rollover gift is a great solution because seniors often do not have enough in deductions to itemize, and with this gift your income is reduced—possibly into a lower tax bracket—while also not having to itemize. Not realizing income on the required minimum distribution or other distributions can save a donor a substantial amount on income taxes.

IS IT FOR YOU?

By making a gift of up to $100,000 from your IRA, you can see your philanthropic dollars at work. You are jump-starting a lasting legacy and can watch your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have already made by transferring that amount from your IRA under this legislation as long as it is $100,000 or less for the year.

You might think that IRA charitable rollovers are only for those who are very well off. It’s true that the cap is $100,000, but you can give any amount less than that as well—depending on the minimum withdrawal from your plan. Rollover gifts can be just $100.

If you want to donate to UW, you can do so by contacting your IRA custodian and instructing them to transfer your desired gift amount to the University of Wyoming Foundation. If you want to designate your gift to an existing fund or a specific program or create a new fund, let us know and we’ll make sure your gift is used in a way that is most meaningful to you.

AN EXAMPLE

Here’s an example. If you are over 70½ years old, you most likely don’t have enough in deductions to itemize on your tax returns. In this situation, your donation to the University of Wyoming would have no tax benefits to you, but you will pay taxes on the IRA distribution to you.

So, say your income comes from Social Security, retirement savings, and a part-time job, so your federal tax bracket is 25%. If you gave a $1,000 gift to UW, you would have to pay $250 in federal income taxes on those funds. In sum, you’d have to withdraw $1,250 to make a $1,000 donation. If you wanted to give that same $1,000 as an IRA rollover gift, you could contact your retirement representative to direct it to UW. Your withdrawal would only be the $1,000.

A final thing to consider—these IRA distributions are mandatory once you reach the age of 70½. They might push you up into a higher tax bracket. An IRA rollover may solve that problem.

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Phone: 307-766-6300

Toll Free: 1-888-831-7795

Fax: 307-766-4045

Email: foundation@uwyo.edu

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