Do you have money saved in an employee retirement plan, IRA or tax-sheltered annuity? Each of these retirement plan assets contains income that has yet to be taxed. Your beneficiaries will owe the income tax at your death, totaling up to 35 percent, which may be reason enough to consider giving your loved ones less heavily taxed assets and leaving your retirement plan assets to charity instead.
Want to get the most value from your nest egg, protect your heirs from heavy taxes and make your mark at our organization? Consider leaving a portion of your retirement plan assets to us.
How It Works
If you die with retirement plan assets in your estate, those assets are subject to income taxes. This can reduce the amount that normally would be passed to heirs by up to 35 percent. In contrast, as a nonprofit organization, we are tax-exempt and eligible to receive the full amount and bypass any federal taxes. Income taxes can be avoided or reduced through a carefully planned charitable gift. Consider these gift options:
- Designate Bryant University as the primary beneficiary for a percentage (1 to 100 percent) of your retirement plan assets.
- Designate a specific amount to be paid to us before the remainder is divided among family beneficiaries.
- Make us the contingent beneficiary to receive the balance only if your loved one, as primary beneficiary, doesn't survive you.
To implement your wishes, simply advise your plan administrator of your decision and sign whatever forms are required.
How You Benefit
Leaving retirement plan assets to Bryant University shields your heirs from taxes on the retirement assets and frees you to give them other assets that are not as heavily taxed.
Betty plans to leave $250,000 to her niece, Karen, and $250,000 to Bryant University. Among her assets, Betty owns a $250,000 IRA. If she leaves the IRA to Karen, it will be subject to income taxes at Karen's marginal income tax rate (35 percent). To avoid her niece having to pay these taxes, Betty names us the beneficiary of her IRA and leaves less tax-burdened assets to Karen. Because our organization is tax-exempt, income taxes are eliminated.
A Second Gift Option
You can also consider creating a charitable remainder trust for heavily taxed retirement plan assets. Such a trust could be set up to receive the proceeds of your retirement plan at your death. The trust would pay income for life to a family member of your choosing, after which the remaining assets pass to us.
Is This Gift Right for You?
Three yes/no questions can help you decide if a gift of retirement plan assets is right for you.
If you can answer yes to each of the following questions, you may find that it makes good sense for you to name us as the beneficiary of your retirement plan assets. If not, we can help you find an option that's a better fit.
- Do you have savings in retirement plan assets, such as an employee retirement plan, IRA or tax-sheltered annuity?
- Have you investigated the tax implications of leaving your retirement plan assets to your loved ones versus leaving them to charity?
- Would you like to make a difference at our organization in the future?
The following is an illustration of how this type of donation works.
A single mom with two kids learns the smart way to give retirement plan assets.
Challenge: Nancy is a single mom with two small children. She has two main estate planning goals: to leave an inheritance for her children and to leave a legacy in support of her community. Recently she met with her attorney for professional advice. Her question: "How can I meet my goals with maximum benefit for my children and my community?"
Solution: Nancy went into the meeting thinking that her IRA should go to her children. But the attorney pointed out that even though both children were still young, they have the potential to be in higher marginal tax brackets when Nancy passes away. If so, a large share of their inheritance would be subject to income taxes and significantly reduced. As a result of this meeting, Nancy changed her plans and named a charitable organization within her community as the beneficiary of her IRA and gave the remainder of her estate assets, which includes appreciated stocks, to her children.
- Nancy's children avoid having to pay heavy income taxes were they to inherit her IRA.
- When Nancy's children inherit their mother's stocks, the law says that when they sell them, they will pay capital gains taxes only on any appreciation from when they received the inheritance, not from the original cost basis.
- Nancy can feel confident her children will inherit assets that are not exposed to heavy income taxation while she supports her favorite charity with a gift that, because of its status as a qualified charitable organization, will be received tax-free.
Giving retirement plan assets to Bryant University shields your loved ones from taxes and frees you to give them other assets that are not as heavily taxed.
How to Complete Your Gift
Once you've considered the tax implications, you'll see the value of leaving your retirement plan assets to us.
If you've decided to shield your heirs from heavy income taxation by making a charitable donation of your retirement plan assets upon your death, simply contact your retirement plan administrator for a change of beneficiary form. Then decide what percentage you would like Bryant University to receive, and name us, along with the percentage, on the beneficiary form. Note that if you are married, your surviving spouse is usually entitled by law to receive the entire amount in certain qualified plans (but not IRAs). Your spouse, however, can sign a written waiver allowing the gift to us. Finally, return the form to your plan administrator, and keep a copy with your will and other estate planning documents.
For More Information
Consulting an estate planning attorney is a smart investment that can save you and your family money and heartache in the long run. Please seek legal advice before deciding who will get what in your estate plan.
Please contact Ed Magro at 401-232-6528 or firstname.lastname@example.org if we can answer any questions you have about using your retirement plan assets to support our mission.