Designate and Donate — Retirement Plan
How It Works
- Contact the plan custodian or account holder about a TOD (Transfer on Death) or beneficiary designation form.
- Designate the Foundation to receive all or a portion of the assets held in the retirement plan.
- Avoid the potential double taxation your retirement savings would face if you designated these savings to your heirs.
- Continue to take regular lifetime withdrawals.
- Maintain flexibility to change designation if your family's needs change during your lifetime.
Retirement Accounts: A Wise Charitable Gift
Planning for retirement is critical to your financial well being. If you are reading this section, chances are you planned well but you also know that life is unpredictable. The good news is that you can make a significant gift to the Foundation with retirement plan assets without adverse effects to your lifetime finances. In fact, leaving retirement plan assets to us can be one of the best financial decisions you can make. Here's why.
Traditional retirement plans such as Individual Retirement Accounts, 401 (k) and 403 (b) plans are funded with pre-tax dollars. The contributions and earnings that you make to this account are not subject to income tax. When you reach the age of 59½, you can take money out of your retirement account without penalty, but you do have to pay ordinary income tax on the distributions. If funds remain in the account after you pass away, be aware that your heirs may have to pay inheritance and estate taxes in addition to income taxes. Depending on the size of your estate, these combined taxes can be as much as 60% of the remaining account balance. Don't make this mistake! Leave your retirement plan assets to the Foundation. Whatever portion of the assets is left to charity will be exempt from income, inheritance and estate taxes.
When planning to support the Foundation and leave assets to loved ones, make certain that you leave your pre-tax assets to qualified charities and your other assets to your loved ones. This strategy assures that your heirs pay less tax on the assets that they receive.
Contact your account custodian today and complete the beneficiary designation forms to maximize the tax savings, take care of your loved ones and leave a legacy at the Foundation.
The “Tax-Free” Gift:
Qualified Charitable Distributions
(Also referred to as Charitable IRA Rollover Gifts)
Did you know the gift of a Qualified Charitable Distribution (QCD) benefits donors aged 70½ and up?
The Qualified Charitable Distribution is an excellent way to show your support for Pottstown Area Health & Wellness Foundation and receive tax benefits in return. As you plan your required minimum distributions (RMD) for this year, consider using your IRA account to make the most of your charitable giving. You receive a tax benefit even if you take the standard deduction!
It’s important to consider your tax situation before deciding whether to make a charitable contribution from your IRA. Be sure to share this gift plan with your financial advisor.
- You must be 70½ or older at the time of gift.
- Distributions must be made directly from a traditional IRA account by your IRA administrator.
- Gifts must be outright, meaning they go directly to Pottstown Area Health & Wellness Foundation. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.
- Gifts from 401k, 403b, SEP and other plans do not qualify. Ask your financial advisor if it would make sense for you to create a traditional IRA account so you can benefit from an IRA Qualified Charitable Distribution.
- IRA Qualified Charitable Distributions are excluded as gross income for federal income tax purposes on your IRS Form 1040.
- The gift counts toward your required minimum distribution for the year in which you made the gift.
- You could avoid a higher tax bracket that might otherwise result from adding an RMD to your income.