Gifts of Retirement Plan Assets Qualified retirement plans are those that receive favorable income tax treatment during an employee’s lifetime. No income tax is due on the funds as contributed, and no income tax is due on the earnings and appreciation while in the plan. You pay taxes on the funds only when you receive them. Such plans come in many forms: a defined benefit or contribution pension plan, money purchase pension, profit-sharing plan, annuity plan, 401(k) or 403(b) plan, stock bonus plan, Employee Stock Ownership Plan (ESOP) or simplified employee pension (usually a SEP-IRA) from your workplace, and Keogh accounts and Individual Retirement Accounts (IRAs) you set up for yourself. Generally, the undistributed balance of qualified retirement plans isfully includable in your gross estate for estate tax purposes. Since the funds in retirement accounts usually represent deferred compensation that has not been subject to income tax, giving the accounts to individual heirs exposes the funds to income taxes. Your retirement dollars can be seriously depleted by this double taxation. Retirement accounts are often exposed to income taxes and estate taxes, at a combined marginal rate that could rise to 65 percent or even higher on large, taxable estates. Yet many of these taxes can be avoided or reduced through a carefully planned charitable gift. Bequest gifts of retirement plan assets By naming a Providence foundation as the beneficiary of all or a portion of your retirement plan, you ensure that all income tax and any estate tax on the gift are completely avoided. You can make such a gift knowing that 100 percent of your retirement plan gift will be transferred to a Providence foundation to benefit the program of your choice. Making a bequest of your retirement plan assets is easy. Simply request a “change of beneficiary” form from your plan administrator. In the beneficiary designation section, list the Providence foundation you wish to support and its tax identification number. (If you are married, your spouse may have to give consent to the designation.) Example: Robert White accumulates $1 million in retirement plan assets. Upon his death at the age of 85, he leaves his assets to his two children. Because of taxes, the amount Robert’s children actually receive could be less than $360,000. By contrast, Robert could have left his $1 million to a Providence foundation, and the entire amount would have been available to benefit the program of his choice, such as cancer, heart, brain, medically fragile children or long-term care for seniors. Charitable remainder trust or gift annuity funded by retirement plan A charitable remainder trust (CRT) is a gift arrangement that allows you to provide income to yourself and/or others, for life and/or a term of up to 20 years, while making a generous gift to a Providence foundation. You transfer property irrevocably to a CRT and specify how the income and principal are to be distributed. The CRT can become effective during your life or at your death. You can fund a CRT at your death (a testamentary CRT) with retirement plan assets to provide income to one or more beneficiaries. After...
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The University of North Carolina Your Supplemental Retirement Plan Decision Guide Supplemental Retirement Plans Plan Options Overview Investment Carriers Before You Enroll Ready to EnrollSupplemental Retirement Plans Plan Options Overview Investment Carriers Before You Enroll Ready to Enroll Appalachian State University East Carolina University Elizabeth City State University Fayetteville State University NC A&T State University North Carolina Central University NC State University UNC – Asheville UNC – Chapel Hill UNC – Charlotte UNC – Greensboro UNC – Pembroke UNC – Wilmington UNC School of the Arts Western Carolina University Winston-Salem State University NC School of Science and Mathematics Other Affiliates: – UNC Health Care – UNC Press Supplemental Retirement Plans Plan Options Overview Investment Carriers Before You Enroll Ready to
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