A Tax-Saving Way to Help the University of Colorado
See Your Generosity in Action
If you are 70½ years old or older, you can take advantage of a simple way to benefit the University of Colorado and receive tax benefits in return. You can give any amount up to $100,000 per year from your IRA directly to a qualified charity such as CU without having to pay income taxes on the money. This popular gift option is commonly called the IRA charitable rollover, but you may also see it referred to as a qualified charitable distribution, or QCD for short.
Why Consider This Gift?
- Your gift will be put to use today, allowing you to see the difference your donation is making for CU students.
- You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.
- If you reached the age of 70½ on or before Dec. 31, 2019, you can use your gift to satisfy all or part of your required minimum distribution for the year. If you turn 70½ on or after Jan. 1, 2020, you can use your gift to satisfy all or part of your required minimum distribution starting at the age of 72. (Note: The RMD requirement has been waived for 2020, per the CARES Act signed into law on March 27, 2020.)
- Since the gift doesn’t count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.
Sample IRA Designation Letters
Frequently Asked Questions
Q: How can I make an IRA charitable rollover gift to CU?
A: Your IRA administrator must make the distribution directly to CU, or you may write a check payable to CU from your IRA checkbook.
Q: What do I need to know if I am making a gift from my IRA checkbook at year end?
A: In order for IRA checks from an IRA checkbook to be counted as a QCD for the current tax year, they must be delivered to and processed by CU by December 31. This is especially important if you expect your QCD to qualify as part of your required distribution for that calendar year. Unlike checks directly from IRA administrators, it is not enough that the check is postmarked or even hand-delivered by December 31. Any IRA gifts from IRA checkbooks processed after December 31 will be counted as a distribution for the next tax year, and you may incur a tax penalty if you have not met your required minimum distribution for the previous year. Make sure you initiate your charitable IRA rollover gift at least several weeks before the end of the year if you are writing your own checks, especially if you will be relying on them to fulfill your required minimum distributions.
Q. I've already named the University of Colorado as the beneficiary of my IRA. What are the benefits if I make a gift now instead of after my lifetime?
A. By making a gift this year of up to $100,000 from your IRA, you can see your philanthropic dollars at work. You are jump-starting the legacy you would like to leave and giving yourself the joy of watching your philanthropy take shape. Moreover, you can fulfill any outstanding pledge you may have made by transferring that amount from your IRA as long as it is $100,000 or less for the year.
Q. I'm turning age 70½ in a few months. Can I make this gift now?
A. No. The legislation requires you to reach age 70½ by the date you make the gift.
Q. I have several retirement accounts—some are pensions and some are IRAs. Does it matter which retirement account I use?
A. Yes. Direct gifts to a qualified charity can be made only from an IRA. Under certain circumstances, however, you may be able to roll assets from a pension, profit sharing, 401(k) or 403(b) plan into an IRA and then make the transfer from the IRA directly to the University of Colorado. To determine if a rollover to an IRA is available for your plan, speak with your plan administrator.
Q. Can my gift be used as my required minimum distribution under the law?
A. Yes, absolutely. If you reached the age of 70½ on or before Dec. 31, 2019, you can use your gift to satisfy all or part of your required minimum distribution for the year. If you turn 70½ on or after Jan. 1, 2020, you can use your gift to satisfy all or part of your required minimum distribution starting at the age of 72. Contact your IRA custodian to complete the gift. (Note: The RMD requirement has been waived for 2020, per the CARES Act.)
Q. When do I need to make my gift?
A. We must receive your gift by Dec. 31 for your donation to qualify this year. If you have check-writing privileges on your IRA account, please mail your check by Dec. 18 in order to give us time to process your gift before the end of the year.
Q. Do I need to give my entire IRA to be eligible for the tax benefits?
A. No. You can give any amount under this provision, as long as it is $100,000 or less per year. If your IRA is valued at more than $100,000, you can transfer a portion of it to fund a charitable gift.
Q. I have two charities I want to support. Can I give $100,000 from my IRA to each?
A. No. Under the law, you can give a maximum of $100,000. For example, you can give each organization $50,000 this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.
Q. My spouse and I would like to give more than $100,000. How can we do that?
A. If you have a spouse (as defined by the IRS) who is 70½ or older and has an IRA, he or she can also give up to $100,000 from his or her IRA.
Q. Can a rollover gift be used to fund a charitable remainder trust or charitable gift annuity?
A. No. The donor can receive no benefits in return for the gift. This includes life income plan payments.
Q. Can a rollover gift be used to maintain or improve a donor's standing in the Buff Club?
A. No. While a charitable IRA rollover gift can be made to Athletics, the donor is not permitted to receive any Buff Club privileges in exchange for the gift. Otherwise, the gift will not be a qualified charitable IRA rollover.
Q. Are there any benefits that a donor can receive?
A. The only permissible benefits from a charitable IRA rollover gift are those that would not reduce the tax deduction for which the donor would have otherwise qualified. At CU, a charitable IRA rollover gift is allowed to count toward naming opportunities and toward recognition society memberships.
It is wise to consult with your tax professionals if you are contemplating a charitable gift.