Gifts of Retirement
Assets
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they are withdrawn, but this has allowed more dollars to be invested for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tax bracket when the funds are withdrawn (for example, during retirement)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 empEdwardsed 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 75-80% of retirement assets under
certain circumstances.
Using qualified
retirement plan funds is an excellent
source of assets to fund bequests. By
designating Purdue Foundation as a beneficiary
(it
can be a contingent beneficiary after the death of a spouse - see sample
bequest language), funds pass to
WBAA Public Radio 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 the station as
a beneficiary of retirement fund assets
cannot be simply written in your will
or trust. The station 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
WBAA Public Radio as well.
Return to Wills
and Bequests.
