Gifts from Retirement Plans during Life
How It Works
- You take a distribution from your qualified retirement plan or IRA that is includable in your gross income
- You make a gift of the distribution or of other assets equal in value to the distribution
- You receive an offsetting charitable deduction
- You may draw on perhaps your largest source of assets, with no adverse tax consequences, to support the programs that are important to you at Women In Dsitress
- The distribution offsets your minimum required distribution
- If you use appreciated securities instead of cash from your distribution to make your gift, you’ll avoid the capital-gain tax on the appreciation
Did you know?
Income taxes on assets in a retirement plan are deferred but not avoided. That means as these assets are withdrawn during retirement they are subject to federal income taxes.
Withdrawing funds from your retirement plan and making a gift of some or all of those funds to support WID will create two tax events: The withdrawn funds will be subject to federal income tax, but the amount contributed to WID will generate a charitable deduction that will offset some or all of the tax. The end result if the entire amount is contributed is a wash for federal income-tax purposes.
However, for some individuals the deductible amounts on federal and state tax returns will be less than the taxable distributions, in which case it will not be a wash.
Please note that withdrawals by those 59½ or younger will be subject to early-withdrawal penalties unless the donor falls within certain exceptions.
Special Opportunity for Donors Aged 70½ and Older
A direct transfer from your IRA to WID can be excluded from your gross income, but no income-tax deduction is allowed for the transfer. To qualify for this benefit:
- You must be 70½ or older at the time of your gift
- The transfer must go directly from the IRA to WID
- Your total IRA gift(s) cannot exceed $100,000 per year
- Your gift must be outright