– IRA or Retirement Plan Assets
MAKING A CHARITABLE GIFT WITH RETIREMENT PLAN ASSETS
You may wish to consider a gift of an IRA or other retirement plan assets to the Community Foundation after your lifetime.
Why? The attractive tax aspect of qualified plans is that they allow an individual to accumulate assets without paying income tax on contributions to the plan, or on the appreciation in the plan, until the plan assets are distributed. Upon distribution, however, substantial taxes come into play.
Because of the harsh, technical tax rules, the transfer of plan assets to family members at your death may trigger two potential federal taxes: the estate tax and the income tax. If your plan assets are payable to a surviving spouse, your spouse will probably be able to postpone some or all of these taxes until his or death.
However, if the beneficiary is someone other than your spouse, the combination of these taxes could consume more that 70% of the plan assets, leaving family members with very little. Therefore, a carefully constructed charitable gift of retirement plan assets, leaving other estate assets, (such as cash, stock, real estate, etc.) available to your family – could provide a major gift to the Community Foundation at minimal cost to your heirs.
The Community Foundation can show you how your retirement plan assets can be used to make a deferred gift and to have a Fund established in your name after your lifetime.
Note: Plans that are most appropriate for funding charitable gifts include profit sharing plans, 401(k) plans, money purchase plans, and IRA’s.
