Without proper planning, you may be surprised to find that the taxes applied to your retirement plan assets are different than you imagined. For instance, when you plan your estate, it may seem natural to designate a family member as the successor beneficiary of your retirement plan, and use other assets to make a charitable gift. But using retirement assets to make your donation and leaving other assets to your heirs often enables you to give more to your heirs.
Since we are a non-profit organization, we won't pay income tax on the distribution (nor will the gift be subject to estate tax). The entire amount comes to us, and your heirs will benefit from a reduced estate tax burden.
Yes, you can. Talk to your financial advisors and us first to project whether your heirs would benefit more from income from a gift plan or withdrawals from your retirement account. A lifetime withdrawal from your plan raises additional tax considerations.
Notify your plan administrator of your wish to change the beneficiary. First, get the advice of your plan administrator and an attorney. Call us to ensure that your plans are fulfilled.
How can you give more to your heirs with less? For the sake of simplicity, let's assume you have $300,000 in an IRA and appreciated stock worth $250,000. You can see from this chart that your heirs actually benefit more from the lower valued gift of stock.
|IRA to Charity||Stock to Heirs|| |
IRA to Heirs
Value of IRA
Less income tax (33%)
Remainder to charity/heirs
The income your heirs receive from your IRA is called “Income in Respect of Decedent“ (IRD). IRD is taxable upon transfer and at the donor's highest tax rate. However, the gift of stock is taxable when the heirs sell the shares; and then in only the gain that has occurred from the date of transfer is taxable — typically at the 15% tax rate.
Learn how a gift of assets can benefit you and nature.
You can leave a legacy for nature. Learn about our Legacy Club.
Discover other types of gift options with the Conservancy.
You can protect rivers and lakes and other natural places by making a planned gift with The Nature Conservancy. Contact us today.