Gifts from Retirement Plans

Retirement plans, including individual retirement accounts (IRAs), 401(k) plans, and 403(b) plans, are often the largest source of assets for most Americans. They can also prove to be an easy and tax-advantageous way to make a charitable gift to Millikin.

Read on to learn about the different ways to make a gift to Millikin via your retirement plan.

If you have an Individual Retirement Account (IRA) and are 70½ years of age or older, please read ahead to the "IRA Rollover" tab.

If you are between the ages of 59½ and 70½, you can withdraw money from your retirement fund, whether that is an IRA, 401(k), 403(b), or other comparable plan, and contribute it to Millikin. The amount you withdraw is includable in your gross income; however, you receive a charitable tax deduction for the value of the gift if you itemize. A gift from your retirement plan during life allows you to tap into perhaps your largest source of assets, avoid adverse tax consequences, and support your favorite program at Millikin. Note:  If you are under age 59½ and make a withdrawal from your retirement fund, the amount withdrawn is subject to a 10% penalty tax as well as being added to your taxable income.

The Protecting Americans from Tax Hikes (PATH) Act of 2015, which was passed by Congress and signed into law by President Obama on December 18, 2015, made permanent a provision commonly known as the "IRA charitable rollover." Here's how it works: if you are  70½ or older, you must begin taking required minimum distributions from your IRA. These distributions are subject to ordinary income tax, based on your personal tax bracket. Instead, you can tell your plan administrator to direct your required minimum distribution, up to $100,000 per year, to Millikin. This allows the gift to completely avoid income taxation. In order to qualify, the gift must be made directly from the IRA to Millikin. Additionally, the donor may not receive any material benefit in return for the gift. For example, a distribution may not be used to fund a gift annuity or charitable remainder trust. Please note, because this gift avoids income taxation, it does not qualify for a charitable tax deduction.

Please contact your IRA plan administrator for more details and to obtain the necessary paperwork to facilitate this gift.

You can name Millikin as beneficiary of any retirement-plan benefits remaining at your death by completing a change-of-beneficiary form from your plan administrator*. You may leave the entire amount to Millikin, or a certain percentage.  The funds are transferred by your plan administrator at your death.

These gifts can be especially tax-advantageous to your estate and heirs. As a qualified charitable organization, Millikin does not pay federal income tax on the gift. If you leave retirement plan assets to your heirs via your estate, they could pay federal income tax and possibly federal estate tax, depending on the size of your estate.

For example, if you designate your children as the beneficiaries of a $100,000 retirement plan, they could lose a significant amount to payment of federal income taxes. By designating Millikin as the beneficiary of that same retirement account, the full $100,000 will pass to Millikin with no tax implications.

*Please note, certain plans contain restrictions as to who can be designated as a beneficiary. Please contact your plan administrator for more information.