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Contributions to retirement plans can provide an excellent opportunity
for growth as they are invested tax-free. The earnings are taxed when
they are withdrawn, but this has allowed more dollars to be invested for
more growth. Additional savings can occur if the recipient is in a lower
tax bracket when the funds are withdrawn (for example, during retirement)
than when the investments were growing. Norman
and Ruth had often put some of their savings into the stock market. They were
also employed by companies that had 401k plans. They kept investing and the value
of their plans kept growing. They had long been active in charitable giving -
One of their first charitable gifts had been a gift of appreciated stock. Norman:
"Our first experience was giving several hundred shares of a stock that
had more than doubled in value. We needed some help that year with our tax situation
and that gift was a great idea. Also, our tax-sheltered retirement plans kept
growing and just recently we rolled them into our IRA. It's grown beyond our wildest
dreams." Ruth: "But taxes will eat up so much of it. Not that
we need it all, but we were hoping to get more value out of it." Norman:
"We recently sat down with our attorney to look at our overall financial plans
to make sure we had set up our affairs to best suit our needs. Our attorney suggested we consider making a charity
a partial beneficiary knowing how much
we would like to help others." Ruth:
"Tax benefits for our estate, protecting our future, and knowing we're making
a difference in other peoples' lives - it feels good!" However, careful
planning concerning the withdrawals from retirement funds needs to be done. Not
only is there a potential income tax burden, but if there is a balance in your
retirement account at your death, there may be estate taxes as well. Estimates
are that taxes could eat up as much as 70-75% of retirement assets under certain
circumstances. Using qualified retirement plan funds is an excellent source
of assets to fund bequests. By designating Floyd Healthcare Foundation as a beneficiary
(it can be a contingent beneficiary after the death of a spouse - see sample
bequest language) funds pass to Floyd Healthcare Foundation free of taxes.
It is possible to set up the beneficiary as the recipient of the entire remaining
funds in the account or establish a percentage to fund the bequest. Please
note - the designation of any charity as a beneficiary of retirement fund
assets cannot be simply written in your will or trust. The charity must be designated
as a beneficiary of the retirement plan. Everyone's personal circumstances
are different, so please consult your tax advisor concerning the use of qualified
retirement funds. We would be glad to make suggestions that could be effective
in accomplishing you and your family's needs and benefit Floyd Healthcare Foundation
as well. Click here to return to Wills and Bequests. | 
