Retirement Plan Assets

He who confers benefits will be amply enriched, and he who refreshes others will himself be refreshed. -Proverbs 11:25

A gift of all or a portion of one’s retirement plan assets from an IRA, 401(k), 403(b) or another retirement plan may be one of the smartest and least “expensive” ways to favor one’s parish, school, or another ministry of the church.

Very substantial sums are currently invested in many persons’ retirement plans.  In many cases, this may be the principal asset owned at one’s death.  If these assets pass to family members other than one’s spouse, their value is taxed at the rate of the recipient’s income tax–that is, if a child is in the 25% tax bracket when he/she receives retirement plan assets from a parent, then a 25% tax will be levied on the receipt of these funds.

Giving assets from retirement accounts to charity can by-pass this tax as the funds pass directly to a charity which does not have to pay the income tax due to its tax-exempt status.  Moreover, these gifts can be accomplished quite easily.  Most retirement fund managers provide “beneficiary designation forms” available through a website or by calling the manager of the funds.

The proper legal name of the charity may be listed on the beneficiary designation form and a portion or amount of the fund to be designated for the benefit of the respective charity.  At the death of the retirement fund holder, the designated funds pass directly to charity without taxation.

©2017 Diocese of Kansas City–St. Joseph

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