Year-End Planning for Charitable Gifts: Is a Charitable IRA Right for You?

As we approach the end of the year, you may be considering a charitable gift. Remember that gifts made now could generate income tax deductions that may help reduce your tax bill for 2018.

For donors who qualify, an IRA Charitable Rollover allows a tax-free transfer directly from a taxpayers’ IRAs to qualified charities, like Texas State University, without income tax consequences. If you’re wondering if an IRA Charitable Rollover is right for you, consider the following requirements:

  • Age requirement. The donor must be 70½ or older at the time of the gift.
  • Limited to IRAs. Only traditional IRA accounts may be used.
  • Rollover Cap. Each taxpayer may transfer up to $100,000 per tax year.
  • Qualified Charities. Only ‘public charities’ will qualify. Private foundations, donor advised funds, and supporting organizations do not qualify.
  • Direct Transfer Required. Distributions must be made directly to the public charity from the IRA by the IRA administrator.
  • No Goods of Services Received. The taxpayer may not receive any goods or services in exchange for the IRA Charitable Rollover.

The effect of a qualified IRA Charitable Rollover is that the money distributed to the charity will not count as income for the donor, but it will count towards the donor’s annual required minimum distribution. If you are one of the many seniors who will not itemize deductions because of the 2017 federal tax reform, this may be an excellent way to minimize taxes and maximize your charitable impact. If a year-end gift to Texas State University or another public charity is in your plans this year, consider the IRA Charitable Rollover.

To arrange an IRA charitable rollover, contact your IRA provider. For more information about making a gift to a program or project important to you at Texas State University, please contact Dan Perry, assistant vice president for University Advancement, at 512-245-4440.

A charitable bequest is one or two sentences in your will or living trust that leave to Texas State University a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to Texas State University, a nonprofit corporation currently located at 601 University Drive, JCK 960, San Marcos, Texas 78666-4684, or its successor thereto, ______________* [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to Texas State or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to Texas State as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to Texas State as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and Texas State where you agree to make a gift to Texas State and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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