Gifts of Retirement Assets

Contributions to retirement plans can provide an excellent asset to give to charity as they grow tax-free, meaning that the earnings are not taxed annually. The earnings are taxed when they are withdrawn, allowing more dollars to be invested for more growth.

Additional savings can occur if the recipient is in a lower tax bracket when the funds are withdrawn (for example, during retirement) than when the investments were growing. But 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 a retirement account at the time of death, there may be estate taxes as well. Estimates are that taxes could eat up as much as 75 to 80 percent of retirement assets under certain circumstances.

Using qualified retirement plan funds is an excellent source of assets to fund bequests. By designating the Garden as a beneficiary (it can be a contingent benficiary after the death of a spouse), funds pass to the the Garden 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 may not simply be written in your will or trust. The charity must be designated in the retirement plan documents as a beneficiary of the retirement plan.

There are other strategies in using retirement fund assets to fund charitable gifts. For example, qualified retirement fund assets may be placed in a charitable remainder trust to provide for children or a spouse. There may be estate tax savings as a result.

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 your and your family's needs and benefit the Garden as well.

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Please note that individual financial circumstances will vary. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only.