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Lifetime Gift from a Retirement Account
(Gift Example)
The first example illustrates an outright gift from an IRA by a donor over age 70½.
The second example illustrates the costs and benefits of a withdrawal from an IRA by a donor younger than 70½, used to fund a life-income gift.
Example 1
You are 75 years old and your adjusted gross income will total $200,000 this year. Earlier in the year you contributed $100,000 to Berkeley, so you have reached the limit (50% of adjusted gross income) on charitable gifts you can deduct this year.
You want to provide additional support for a Berkeley program, so you direct a $100,000 payment from your IRA to us.
Here is a summary of the costs/benefits of making this gift: |
|
| Donor | Individual, age 75 |
| Withdrawal from IRA | $100,000 |
| Contribution | $100,000 |
| Income tax on withdrawal | $0 |
| Charitable deduction for withdrawal | $0 |
| Previous gift this year | $100,000 |
| Combined gift to us | $200,000 |
| Income tax on combined gift | $0 |
Example 2
You are 65 years old. You withdraw $100,000 from an IRA and use it to create a Charitable Gift Annuity, making lifetime payments to you, then paying the remaining balance to Berkeley.
Here is a summary of the costs/benefits of making this gift: |
|
| Donor | Individual, age 65 |
| Withdrawal from IRA | $100,000 |
| Contribution | $100,000 |
| Current from IRA | $3,000 (3%) |
| Annuity payment | $6,000 (6%) |
| Tax-free portion | ($2,949) |
| Tax on IRA withdrawal | $35,000 |
| Charitable deduction | $41,311 |
| Deduction tax savings @ 35% | $14,459 |
| Net tax cost of gift | $20,541 ($35,000 - $14,459) |
| After-tax income from annuity | $4,932 / year |
| Additional annual income | $1,932 ($4,932 - $3,000) |
For more information
Email us, complete the personal illustration form, or call us at 510-642-6300 so that we can assist you through every step of the process.
