Planned Giving - A Gift From Your Retirement Account
Tax-qualified retirement plans and Individual Retirement Accounts (IRAs) represent wonderful charitable opportunities.
Why are tax-qualified retirement plans often called “tax traps”?
Although tax-qualified retirement plans and IRAs are important and effective vehicles for accumulating retirement savings, that rosy picture changes once you have retired. Distributions from the accounts are generally taxed as ordinary income. Required minimum distributions increase each year after age 70½ , forcing you to shrink your tax-advantage account and pay taxes – even if you don’t need the income at that time.
The income taxes on distributions continue for a spouse or heirs who inherit your retirement accounts. Required distributions for your heirs may be forced during pre-retirement, potentially causing heirs to pay taxes on distributions during their peak wage-earning years. Because retirement assets are subject to estate and generation-skipping taxes for transfers to non-spousal heirs, the combination of these transfer taxes and the income taxes can exceed 80 percent!
What are the financial benefits of making an estate gift through tax-qualified retirement accounts or IRAs?
Designating a charity as the beneficiary of a retirement account causes the charitable gift to be deductible for estate tax purposes. Also, heirs may prefer to receive assets that are less highly taxed, leaving the retirement assets instead to charity. A tax-exempt charity will not have to pay the income taxes otherwise due and will therefore enjoy the full value of the gift.
You may prefer to designate retirement assets to a charitable life income arrangement (such as a gift annuity or charitable remainder trust) that will pay income to your heirs and eventually benefit Albany Medical Center. Your arrangement can be customized to provide a guaranteed income for your life, accumulate over time (both income and assets), or provide flexibility in the timing and amount of distributions to the beneficiaries. In many instances, your heirs may prefer the charitable plan over “stretching” the retirement account for longer periods of time.
The Albany Medical Center’s office of Gift Planning will gladly assist donors and their attorneys in designating retirement accounts to the college or hospital. If you would like to notify Albany Med of your intentions, please complete our Estate Intention Form and mail to:
For more information please contact:
Lori Matt-Murphy - Associate Vice President for Foundation Operations and Planned Giving
(518) 262-8137
mattmul@mail.amc.edu
