Non-cash gifts
IRA charitable rollover provision resurrected through 12.31.2009
Although cash is the most common form of gift to the Institute, there are many other avenues for making a contribution, including the new IRA charitable rollover provision.
Securities and mutual funds
Giving appreciated securities or mutual funds is a fast and easy way to make a gift to MIT. Gifts of stock can be directed to any area of the Institute, and can help you —
- diversify your assets, and
- minimize capital gains taxes.
It is almost always a better strategy to give appreciated securities directly to the Institute, rather than selling them and donating the proceeds of the sale. In fact, many alumni find that the tax benefits associated with giving appreciated securities to MIT actually allow them to increase the size of their gift. If you own securities that have lost value, you can sell the stock, take the capital loss deduction, and make a gift to MIT.
A planned gift of appreciated securities, such as a charitable remainder trust, can provide you with a lifelong income stream that exceeds what you would otherwise have received in dividends.
Here are instructions for giving appreciated securities:
- If your stock certificates are held by a bank or a broker
- If you hold the stock certificates yourself
It is also possible to make a gift using shares of mutual funds. Here are instructions in PDF for transferring mutual fund gifts to MIT’s account at Fidelity Investments.
Questions about gifts of stock or mutual funds can be directed to:
MIT Office of the Recording Secretary
617.253.5048
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Closely held stock
Don’t believe the conventional wisdom: you can make a charitable gift of closely held shares of stock in your own company, and receive the same tax benefits as if those shares had been publicly traded.
You must secure a qualified appraisal of stock in order to receive this deduction. MIT can sell the shares back to the company, either for a lump sum or a promissory note, on the condition that there has been no prearrangement with the company.
Questions about closely held stock gifts can be directed to:
MIT Office of the Recording Secretary
617.253.5048
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IRA charitable rollover
Tax relief act of 2008 allows charitable IRA distributions ... but only through 12.31.2009.
On October 3, 2008, President Bush signed into law an important provision that will offer incentives for those 70½ and older to make tax-free distributions directly to MIT from their Individual Retirement Accounts (IRAs).
The Tax Extender Relief Act of 2008, which extends the Pension Protection Act of 2006 (PPA 2006), allows individuals to make distributions of up to $100,000 from their traditional, rollover, or Roth IRAs without those distributions counting as gross income. Prior to PPA 2006, a donor would have had to report the $100,000 withdrawal as income, and then declare an offsetting income tax deduction for the charitable contribution.
The IRA charitable rollover provision has a shelf life, however: It is effective only through December 31, 2009.
Nuts and bolts of the provision:
- Donors must be at least 70½ years of age at the time of the transfer;
- the funds must pass directly from the IRA custodian to the qualifying charity (i.e., a withdrawal followed by a contribution would still need to be reported as income);
- contributions are limited to $100,000 per tax year; and
- the charity must be a tax-exempt organization to which deductible contributions can be made.
MIT is a qualifying 501(c)(3) institution. Its tax identification number is 04-2103594.
New opportunities for a broad range of seniors
Tax experts anticipate that the window of opportunity will most appeal to qualified donors
- who have well-funded IRAs and more than enough financial assets to live on or to pass on to their heirs; or
- who need to take minimum distributions from their IRAs anyway⎯distributions that would normally be taxed; or
- who don’t itemize their deductions; or
- for whom this provision could lower their AMT; or
- whose income level causes the phase-out of their exemptions; or
- who live in states with no charitable deduction; or
- who already contribute at their 50 percent deduction limit; or
- for whom additional income would cause more of their Social Security distributions to be taxed.
Provision only in effect through Dec. 31, 2009
Congress has specified only a finite period of time in which to make contributions to MIT from Individual Retirement Accounts. The new rules expire on January 1, 2010; thus, anyone who is 70½ now (or will be before January 1, 2010) and who meets the other qualifications, can make a $100,000 charitable gift to the Institute for each of the 2008 and 2009 tax years.
Caveats
- Contributions may not be directed to donor-advised funds or supporting organizations.
- Contributions may not be used to fund charitable gift annuities or charitable remainder trusts.
- The law applies only to traditional, rollover, and Roth IRAs—not to other types of plans like 401(k)s, 457s, 403(b)s, etc.
- There is no federal income tax deduction available for such gifts in addition to their income exclusion benefits.
- Before you reach any decisions about using the IRA rollover provision to make a gift to MIT, please consult your attorney, accountant, or other financial advisor to be certain that you are, in fact, eligible to take advantage of this important change in the law.
For more information, please contact:
MIT Office of Gift Planning
617.253.6463
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Other assets
You can significantly benefit MIT and at the same time reduce your taxes by giving assets other than cash and stock.
Retirement assets
When retirement assets—those held in qualified retirement plans or in individual retirement accounts (IRAs)—pass to heirs, they can lose up to 85% of their value to estate, gift, and income taxes. If you designate them to MIT, they are not taxed and their full value supports the purpose you choose. Thus, giving retirement assets magnifies your impact without costing your heirs.
For taxpayers over age 70½, the IRA charitable rollover provision allows tax-free distributions directly to charity from traditional or Roth IRAs in 2008 and 2009.
Real estate
By giving real estate, you can avoid the capital gains taxes and brokers’ fees often associated with selling these assets. You may give real estate outright to MIT, or use it to establish a gift that pays you income.
Such contributions may consist of a full or partial interest in almost any kind of property, including—
- residence,
- vacation home,
- farm,
- ranch,
- condominium,
- cooperative apartment, or
- commercial property.
Personal property
Gifts of personal property are a creative way to earn a tax deduction while helping MIT. You can give equipment, artwork, rare books, or any other kind of property that the Institute can use in its educational mission. We would be happy to consult with you about gifts of personal property.
Questions about each of these types of gifts of other assets can be directed to:
MIT Office of Gift Planning
617.253.6463
(JavaScript must be enabled to view this email address)
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