Donations & Giving

Gifts from Retirement Plans

Your retirement-plan benefits are very likely a significant portion of your net worth. And because of special tax considerations, they could make an excellent choice for funding a charitable gift.

Retirement-plan benefits include assets held in individual retirement accounts (IRAs), 401(k) plans, profit-sharing plans, Keogh plans, and 403(b) plans.

How It Works

  1. You take a distribution from your qualified retirement plan or IRA that is includable in your gross income
  2. You make a gift of the distribution or of other assets equal in value to the distribution
  3. You receive an offsetting charitable deduction
  4. If you are 70½ or older, read about the IRA Rollover Opportunity (INSERT HYPERLINK TO IRA ROLLOVER) that is available to you

Benefits

  • You may draw on perhaps your largest source of assets, with no adverse tax consequences, to support the Wauwatosa Public Library Foundation.
  • 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

How It Works

  1. You name the Wauwatosa Public Library Foundation as beneficiary for part or all of your retirement-plan benefits
  2. Funds are transferred by plan administrator at your death

Benefits

  • No federal income tax is due on the funds that pass to the WPLF
  • No federal estate tax on the funds
  • Your heirs will not have to pay income taxes that come with having to take distributions and depleting the IRA within 10 years.
  • You make a significant gift to the Wauwatosa Public Library Foundation

Special note: Email us at tosalibraryfoundation@gmail.com to tell us of your intent, and we will assist you with the details. We recommend talking to financial and tax advisors for any questions you may have about personal tax and financial implications of certain giving vehicles.

Benefits of the IRA charitable rollover

  • The gift is very simple to arrange.
  • The amount transferred from an IRA to charity is not added to taxable income.
  • The amount transferred counts towards the minimum required distribution. The required beginning date for distributions from an IRA was the age of 70½, but the SECURE Act, enacted in December of 2019, raised that age to 72 for persons who had not reached the age of 70½ by 2019. When a donor makes an IRA charitable rollover after the applicable required minimum distribution age, the amount transferred is a qualified charitable distribution and will count towards the minimum distribution requirement, subject to certain adjustments if that donor has been making post-age-70½ contributions to the IRA.

Requirements and restrictions for making an IRA charitable rollover gift:

  • The donor must be 70½ or older.
  • The gift must be made directly from the IRA to an eligible charitable organization.
  • Gifts to all charities combined cannot exceed a total of $100,000 per taxpayer for the year.
  • The gifts must be outright, and no material benefits can be received in return for the gifts. Thus a transfer for a gift annuity, charitable remainder trust, or pooled income fund is not permitted.
  • Gifts cannot be made to a donor advised fund, supporting organization, or private foundation.
  • The gift is not included in taxable income, and no charitable deduction is allowed.
  • The gift can be made only from an IRA. Gifts from 401(k), 403(b), and 457 plans are not permitted.

An IRA rollover may be the right gift for you to make if:

  • You want to make a charitable gift and your IRA constitutes the largest share of your available assets.
  • You are required to take a minimum distribution from your IRA, but you do not need additional income.
  • You do not itemize your deductions. In that case, a personal IRA distribution increases your taxable income without the benefit of an offsetting deduction. An IRA charitable rollover will not be included in your taxable income even if you do not itemize other deductions.
  • You live in a state where retirement-plan distributions are taxable on your state income-tax return, but your state does not allow itemized charitable deductions.
  • You would like to make an additional charitable gift, but it would not be deductible because of the annual limitation of 60 percent of adjusted gross income for charitable contributions. The IRA charitable rollover is equivalent to a deduction because it is not included in taxable income.

Here are the steps to take to make a gift:

  • If you want to make a qualifying transfer, contact your IRA administrator and instruct that person to transfer funds to the charity(ies) you designate.
  • Contact the WPLF at tosalibraryfoundation@gmail.com. We will answer your questions and provide instructions for completing your gift.

Special note:  We recommend talking to financial and tax advisors for any questions you may have about personal tax and financial implications of certain giving vehicles.

Give