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Gifts of Retirement Assets
Goal: Avoid the twofold taxation on
IRA or other employee benefit plans
Benefit: Lets you leave your family
other assets that carry less tax liability
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they are withdrawn, but this has allowed more dollars to be invested for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tax bracket when the funds are withdrawn (for example, during retirement)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
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!"
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
Using qualified retirement plan funds is an excellent source of assets to fund
bequests. By designating The Foundation of Monongalia General Hospital, Inc. as a beneficiary (it
can be a contingent beneficiary after the death of a spouse - see sample
bequest language), funds pass to Mon General Hospital 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 Mon General Hospital as well.
here to return to Wills and Bequests.