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Special Tax Incentive for IRA Gifts to Esalen

Special Tax Incentives for IRA Gifts to Esalen

New temporary legislation allows donors aged 70½ and older to direct distributions of up to $100,000 per year from their IRAs and ROTH IRAs to Esalen and other nonprofits, without incurring income tax on the withdrawal. This is a significant incentive that removes the tax penalty for some donors who want to use their IRAs to fund a charitable gift.

There is also a special opportunity this month (January of 2013) to make a 2012 Charitable IRA Rollover gift if the Donor received an IRA distribution in December of 2012.

Because Congress did not extend the Charitable IRA Rollover provision during 2012, the American Tax Payer Relief Act of 2012 also states that Donors may treat an IRA distribution made after November 30, 2012 as a 2012 Charitable IRA Rollover gift if the recipient of the December distribution makes a charitable gift of the December distribution to a qualified charity before February 1, 2013. This means that a donor who received an IRA mandatory distribution or other distribution during December of 2012 may choose to make a charitable gift in January of 2013 to a qualified charity and it will be treated as a 2012 Charitable IRA Rollover gift.

The normal rules apply: the Donor must be 70 and ½ and the amount must be $100,000 or a lesser amount and the gift must be made to a public charity.

What You Should Know:

  • Gifts 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.
  • If you have retirement assets in a 401(k), 403(b) etc., you must first roll those funds into an IRA, and then you can direct the IRA provider to transfer the funds from the IRA directly to Esalen.
  • A 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 Esalen, plus any other charity the donor benefits, cannot exceed $100,000 per year. Email us to learn more about how you can put your IRA to work at Esalen Institute.

How it Works

Current legislation gives donors aged 70½ and older an opportunity to direct lifetime distributions from their IRAs and ROTH IRAs to Esalen without incurring income tax liability on the withdrawal through December 2013. Distributions to Esalen and other charitable beneficiaries can total $100,000 and must be made outright — they cannot fund a life-income gift.

Learn more about this opportunity and how you can make a gift to conservation through your IRA. Alternatively, contact us and we'll be happy to give you more information about this charitable incentive. Donors younger than 70½ can make a withdrawal from their IRA or other type of retirement plan, pay income tax on the withdrawal, and donate the proceeds to Esalen.

These gifts can be made outright or can fund a life-income gift and will generate a charitable deduction for the donor. It is always best to consult your tax advisor(s) to determine how your personal circumstances might be affected by this opportunity. Esalen Institute is a 501(c)(3) Charitable and Educational organization.

If you have additional questions, please contact Elizabeth Stacey, Esalen Institute Director of Advancement, - 831.250.1022 x253 or elizabeth.stacey@esalen.org.

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