Gifts of Retirement
Assets e
Contributions to retirement plans can provide
an excellent opportunity for growth as they
grow tax-free, meaning that the growth or earnings
are not taxed annually but can continue to grow.
The earnings are taxed when they are withdrawn,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the funds are withdrawn (for example, during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 contingent
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 Self Regional Healthcare Foundation
as a beneficiary (it can be a contingent beneficiary
after the death of a spouse - see sample
bequest language) funds pass to Self Regional
Healthcare 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 Self Regional Healthcare Foundation
as well.
Click here to return to Wills
and Bequests.
Please
note, individual financial circumstances will vary. The information
on this site does not constitute legal or tax advice. Donor
stories and photographs are for purposes of illustration only.
As with all tax and estate planning, please consult your attorney
or estate specialist. All material is copyrighted and is for
viewing purposes only. Use of this site signifies your agreement
with the terms of use. The content
in this Planned Giving section has been developed for Self Regional
Healthcare by Future Focus.
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Revised:
July 10, 2008 15:54
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