Gifting With IRAs

Did you know that a combination of estate taxes, income taxes, and generation-skipping transfer taxes can consume nearly 80% of a retirement plan account such as an IRA? For many people, the money accumulated through the years in retirement plans such as TIAA-CREF or PERS represents a significant percentage of their total assets. Even with the minimum distribution rules for mandatory withdrawal, many of these plans will still have large balances at the end of the life of the owners. People are often very surprised to learn that assets they thought would simply pass to heirs from their qualified retirement account are among the most heavily taxed assets in their estate.

There are ways to avoid, or significantly reduce, these taxes. If you are interested in supporting the Achievement Centers for Children with a planned gift, a qualified retirement plan or IRA may be the best asset to make a gift. When you make the Achievement Centers the beneficiary of your retirement plan, you would eliminate the income tax, generation-skipping transfer tax, and the estate tax on the funds in the plan. Therefore, an IRA is a Terrific Asset to Donate to Charity . . . . .

There are two ways to use your IRA as a gift to charity.

1. Assign charity as the beneficiary of your traditional IRA or other qualified retirement plan.

The funds from the IRA or qualified retirement plan that you leave to charity qualify for an estate-tax deduction and are not subject to income taxes because the charity is tax-exempt. Thus, using these assets you can make a significant charitable gift at relatively little cost to your heirs. All you have to do is name the charity as beneficiary of a portion of your IRA or qualified retirement fund. It can be a percentage, or even the entire amount if you have no heirs. Following your death, that portion of leftover funds will be paid to the charity in a lump sum, totally tax-free.

It is simple and fast.

And gifting your IRA this way is simple. All you have to do is fill out a Traditional IRA Beneficiary Designation/Change Form (Form 2303) naming the Achievement Centers as your beneficiary and file it with your plan administrator.

2. Make tax-free charitable distributions from your IRA.

Achievement Centers for Children can help turn your individual retirement accounts (IRAs) into tax-saving charitable gifts. New tax benefits allow more people to experience the joy of giving during their lifetimes.

Through 2009, retirement assets may become a preferred charitable gift for seniors as IRA distributions to charity can now receive new tax advantages. Americans age 70½ and up can make tax-free IRA contributions to public charities such as the Achievement Centers for Children. These gifts can take the place of required minimum distributions that would otherwise be taxed. Such gifts can also relieve tax penalties that affect high income taxpayers, including loss of AMT exemptions and reductions in itemized deductions and personal exemptions. In some cases IRA gifts may reduce income taxes on Social Security benefits.

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