An Ingenious Bequest:
Your Retirement Plan Assets
If you expect to leave assets in a retirement plan account, this can be the best source for a gift to United Cancer Research Society. Your main reason for a bequest is to support our important work. Of course, you and your professional advisors must agree on the best way to carry out your wishes. Tax savings are generally a key consideration.
The principal advantage of donating retirement plan assets is the avoidance of income taxes as well as estate taxes. Since the funds in a qualified plan usually represent deferred compensation, giving the assets to individual heirs may trigger a total effective marginal tax rate that is incredibly steep--even exceeding 75% in some cases.
Avoiding Tax Impact
After yhour lifetime, the undistributed balance in a retirement plan account will have to
be distributed and taxed to someone else, either to yhour estate or to an heir. Because a
charitable organization such as United Cancer Research Society is tax-exempt, the deferred
income in your qualified retirement plan account may never be taxed when you name us as
beneficiary.
Professional estate planners know that the best assets to transfer to a charitable organization are normally those items that generate "income in respect of a decedent," a term used by the IRS to denote assets subject to income tax in addition to estate tax. The largest income source in respect of a decedent will usually be one's retirement plan.
By your bequest to the United Cancer Research Society, you can make sure that 100% of your retirement plann assets will support yhour specific philanthropic objectives--at a relatively small cost to your individual heirs.
Sorting out Your Retirement Plans
Qualified retirement plans are one of two types: annuity plans or individual
account plans. Annuity plans, which are generally referred to as defined
benefit plans, pay regular retirement income to a participant. Since these payments often
terminate upon the death of the participant or the surviving spouse, there is usually
nothing available to give a charitable organizaion or to any other beneficiary.
In comparison, individual account plans are frequently described as defined contribution plans, and they resemble tax-sheltered savings accounts. Some examples are money purchase plans, profit-sharing plans, 401(k) plans, stock bonus plans, Individual Retirement Accounts (IRAs), and Employee Stock Ownership Plans (ESOPs). If a participant dies before the entire account has been distributed, the remaining balance can be transferred to a charitable organization or an heir. Individual account plans have become more and more prevalent in the work world.
How to Donate a Retirement Account
To leave the balance of a retirement account to United Cancer Research Society after your
lifetime, simply advise the plan administrator of your wish and sign whatever form is
required. For an IRA or Keogh plan you administer personally, notify the custodian in
writing and keep a copy with your valuable papers.
If you're maried, your surviving spouse is usually entitled by the plan requirements to receive the entire amount in certain qualified plans, such as those mentioned above, except IRAs. Assuming other resources are available, your spouse may be willing to execute a written waiver; if this isn't done while you are living, a qualified disclaimer must also be signed. Then your bequest of a retirement account is allowable. If you prefer to make your spouse the primay beneficiary of the account, name United Cancer Research Society as the secondary beneficiary.
Perhaps you want your children to benefit from your retirement account, too. In that case, designate a specific amount to be paid to us, before thedivision of the rest among your children.
