Your IRA, 401(k), 403(b), or other Qualified Retirement Plan can provide a tax-smart way to make an impact on Caltech either now or after the end of your lifetime. The Qualified Charitable Distribution or QCD (sometimes called an “IRA Charitable Rollover”) is a great way to make a tax-free gift now to Caltech and satisfy your Required Minimum Distribution (RMD) too.

A gift of retirement plan assets could be right for you if:

  • You have an IRA or other Qualified Retirement Plan such as a 401(k) or 403(b).
  • You do not expect to need all of your retirement plan assets during your lifetime.
  • You have other assets, such as securities and real estate, that you want to pass to heirs.
  • You want to provide income or payments to loved ones after you are gone.
  • You would like to make a charitable bequest to Caltech.

Option 1: Make a tax-free gift now with a Qualified Charitable Distribution (an “IRA Charitable Rollover”).

You can make a tax-free gift with a Qualified Charitable Distribution (QCD) from your IRA. (Other Qualified Retirement Plans such as 401(k)s and 403(b)s are not eligible.) You must be at least 70½ years old to take advantage of this opportunity. Your QCD must go directly from your IRA administrator to Caltech. The total of all of your QCD gifts for 2024 cannot exceed $105,000 per person however, your spouse with a separate IRA can also make a QCD of up to $105,000 in 2024 if they otherwise qualify.

The benefits of a QCD gift include:

  • If you don’t itemize your income tax deductions, a QCD provides the tax benefits of an itemized income tax charitable deduction.
  • If you are age 72 and must take a Required Minimum Distribution (RMD), your QCD gift can satisfy your RMD without increasing your income taxes.
  • Your gift provides immediate support for the important work of Caltech with a tax-free gift.

Option 2: Designate your remaining Qualified Retirement Plan assets as a contribution to Caltech.

Another attractive option is to designate Caltech as the recipient of some or all of what’s left in your IRA, 401(k), 403(b), or other Qualified Retirement Plan at the end of your lifetime.

In addition to having the satisfaction of making a significant future gift to Caltech, your benefits include:

  • Your estate is entitled to an unlimited estate tax charitable deduction for the value of your Qualified Retirement Plan donated to Caltech.
  • Since Caltech is tax-exempt, there will be no income taxes paid on the distribution to Caltech.
  • A tax-smart estate planning strategy is to contribute taxable Qualified Retirement Plan assets to Caltech and preserve non-retirement plan assets for your heirs.
     

Note: Directing your Qualified Retirement Plan to charitable and noncharitable beneficiaries can accelerate the income tax. Always consult with your advisors before naming the beneficiaries of your Qualified Retirement Plan.

Option 3: Designate your remaining Qualified Retirement Plan assets for a life income plan.

Alternatively, you can designate that at the end of your lifetime some or all of the assets remaining in your IRA, 401(k), 403(b), or other Qualified Retirement Plan be used to fund a charitable remainder trust or charitable gift annuity that will make payments to family members or other loved ones for the rest of their lives. When the life income gift arrangement ends, what is left will go to Caltech.

In addition to having the satisfaction of making a significant future gift to Caltech, your benefits include:

  • A charitable remainder trust or charitable annuity can provide a lifetime of income or payments to your chosen beneficiary.
  • The gift portion of your charitable remainder trust or charitable gift annuity provides an estate tax charitable deduction if your estate is subject to estate taxes.
  • A tax-smart estate planning strategy is to contribute Qualified Retirement Plan assets for a life income gift and preserve non-retirement plan assets for your heirs.