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Lifetime Gift from a Retirement Account
(Complete gift description)

A New Tax Incentive for IRA Gifts
New legislation allows donors aged 70½ and older to direct distributions of up to $100,000 per year from their IRAs to Yale, without incurring income tax on the withdrawal. This is a significant incentive that, for the first time, removes the tax penalty for some donors who want to use their IRAs to fund a charitable gift.

The new provision will be in effect in just the 2006 and 2007 tax years. Gifts made under it must be outright — the donor cannot use the distribution to fund a life-income gift such as a charitable gift annuity. Gifts can only be made from a traditional or Roth IRA — other types of retirement plans are not covered by the law.

The donor will receive no charitable income tax deduction for the distribution from the IRA. However, gifts from an IRA will not count toward the deduction limitation* for charitable gifts. This means that a donor whose gifts from non-IRA assets have reached his deduction limitation for the year can make an additional gift from his IRA with no penalty.

Total charitable IRA distributions, to Yale plus any other charity the donor benefits, cannot exceed $100,000 per year. Charitable distributions can be counted toward the donor's required minimum distribution from his IRA for the year.

Younger Donors Can Also Make Lifetime Gifts
Donors under age 70½ who are not covered by the new legislation described above can make a withdrawal from their retirement accounts and donate the proceeds to Yale. The withdrawal will be included in their taxable income for the year, but they will receive an offsetting charitable deduction for their contribution. These donors can also use their retirement plan withdrawals to create a gift plan that will pay them lifetime income, such as a charitable gift annuity.

*Donors may deduct contributions of cash up to 50 percent of their adjusted gross income (AGI) in any tax year (any excess may be deducted over the following five tax years); they may deduct contributions of appreciated property, like stock, up to 30 percent of AGI. The new legislation exempts distributions from IRAs made by donors aged 70½ and older from these limitations.

For more information

Email us, complete the personal illustration form, or call us at 1 (800) 445-6086 so that we can assist you through every step of the process.