Gift and Estate Planning
Making IRA Transfers to UT Austin a Win-Win
Retirement is a time to take stock of the legacy you will leave. One way to ensure that what you've built over your lifetime lives on is by supporting a place that makes a difference every day - The University of Texas at Austin. And one of the easiest ways to do that is with an IRA charitable gift.
If you are 70½ or older, you are required to distribute funds annually from your Individual Retirement Account (IRA). This mandatory distribution often creates a tax burden. But federal law* allows you to make direct, annual transfers of up to $100,000 from an IRA to charity without treating the distribution as taxable income. These "charitable transfers" can significantly lower your taxable income, and a direct transfer to UT Austin from your IRA counts toward your minimum required distribution.
An IRA charitable gift can benefit retirees, who often have paid off their mortgages and don't file itemized returns. The gift may help to neutralize the negative tax consequences of a minimum required distribution.
How important are IRA charitable gifts to UT? To date, alumni and friends have provided more than $17 million from their IRAs to support faculty and students working together to solve society's biggest challenges. These gifts have transformed UT Austin, and you can designate your IRA gift to the UT people and programs you care about most. Give to a good cause and gain an income tax advantage.
*Established under the Pension Protection Act
More About the IRA Charitable Transfer
Congress has permanently extended the opportunity for Americans to make direct transfers from their Individual Retirement Accounts (IRAs) to public charities for 2015 and beyond. While individuals may begin taking distributions from their IRAs as early as age 59½, they are required to begin taking them at age 70½. The mandatory distribution often creates a tax burden, even if the individual donates the money to charity. The IRA charitable transfer provision, established under the Pension Protection Act, allows those at least 70½ to donate up to $100,000 to charitable organizations directly from their IRA, without treating the distribution as taxable income.
This has the ability to help senior citizens who have often paid off their mortgage and therefore no longer file itemized returns. The provision neutralizes negative tax consequences and encourages charitable giving during one’s lifetime.
- Eligibility Age. Taxpayers age 70½ and older are required to make annual distributions from their IRAs which are then included in the taxpayers’ adjusted gross income (AGI) and subject to taxes. The IRA charitable transfer permits those taxpayers to make donations directly to charitable organizations from their IRAs without counting them as part of their AGI and, consequently, without paying taxes on them. No charitable tax deduction is allowed because these IRA transfers involve assets that have never been taxed.
- Annual Cap. A donor’s total combined charitable IRA contributions cannot exceed $100,000 in any one year.
- Eligible Charities. Charitable contributions from an IRA must go directly to a public charity that is not a supporting organization. Contributions to donor-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA contributions. Transfers to charitable gift annuities or charitable remainder trusts do not qualify either because the donor receives a benefit.
- Eligible Retirement Accounts. Distributions can only be made from traditional Individual Retirement Accounts or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are ineligible for the tax-free treatment.
- Directly to the Charity. Distributions must be made directly from the IRA trustee payable to the public charity.
- No Gifts in Return. Donors cannot receive any goods or services in return for charitable IRA transfer contributions in order to qualify for tax-free treatment. The gift cannot be used to pay memberships or to retain or obtain preferred seating for athletic events.
- Written Receipt. In order to benefit from the tax-free treatment, donors must obtain written substantiation of each IRA transfer from each recipient charity. UT Austin will provide a receipt.
David Justice: Serving Humanity by Advancing UT’s Energy Institute
- Contact the Gift and Estate Planning Team at 512-475-9632, toll-free: 800-687-4602, or firstname.lastname@example.org to discuss the possibility of making an IRA charitable transfer.
- Seek the advice of your financial or legal advisor to make sure this gift fits your goals.
- If you include the university in your plans, please use our legal name and Federal Tax ID:
Legal Name: Board of Regents of The University of Texas System for the benefit of The University of Texas at Austin
Address: P.O. Box 7458 Austin, TX 78713
Federal Tax I.D. No: 30-0710145
To qualify for the IRA charitable transfer, the gift:
- Must come directly from your IRA administrator
- Should be made payable to The University of Texas at Austin. Click here for printable instructions.
- Should be mailed to:
University Development Office
Gift and Estate Planning Team
P.O. Box 7458
Austin, TX 78713-7458
IRS Circular 230 Notice: The University of Texas at Austin does not provide legal, tax, or financial advice. Consequently, we urge you to seek the advice of your own legal, tax, or financial professionals in connection with gift and planning matters. This information is not intended to be used and cannot be used for the purpose of avoiding tax-related penalties.