Western Kentucky University

Legacy of Spirit – Office of Gift Planning





IRAs May Be Your Best Resource for Assisting WKU

Q: I understand that if I leave my IRA to family members they will have to pay income taxes on future withdrawals.  Would it save taxes to leave part or all of my IRA to Western Kentucky University?

A: Yes – you can name WKU as a beneficiary of all or part of your IRA and any amount we receive will be free of all income taxes – and state and federal estate taxes, as well.

Q: Do I need to change my will to make an IRA gift?

A: No – the best practice is to ask the trustee or custodian of your account for a new IRA beneficiary form.  Most forms provide language for charitable distributions, but we will need to provide you with our correct legal name.

Q: Can I leave an IRA to create a charitable gift annuity for a family member?

A: The IRS has issued a private ruling permitting a donor to fund a charitable gift annuity at her death with an IRA.  The gift would be partly deductible for estate tax purposes, but the IRS has not ruled on how payments to the recipient would be taxed.

Q: I have a 401(k) plan, not an IRA.  Can I leave something to the University from that account?

A: Yes, friends can name us as a beneficiary of 401(k) plans and 403(b) plans, as well, with the same tax advantages as an IRA bequest.  Note that married donors will need a spousal consent form for gifts from these accounts (IRAs are an exception).

Q: Last year I made a direct gift to WKU from my IRA (I’m over age 70-1/2), and avoided taxes on my required distribution.  Can I make a similar gift for 2015?

A: The IRA “rollover” gift provision expired after 2014, and Congress may not vote to renew it for 2015 until later this year.  If you itemize your deductions, a good strategy would be to instruct your IRA custodian to make a direct 2015 gift to WKU from your account, up to your required minimum distribution. If Congress should fail to renew the IRA provision, you would be taxable on a minimum distribution but could still take a charitable contribution deduction that avoids tax. Our staff is closely monitoring IRA tax legislation, and we encourage you to contact our office before making any IRA gift.

Q: I have a Roth IRA and am not taxed when I make withdrawals.  Will it save taxes to leave this IRA to WKU?

A: Your gift could save state or federal estate taxes, but the Roth account would be free of income taxes, regardless of who receives it.  But Roth IRAs could be a good way to fund a charitable gift annuity with the University.