Retirement accounts

Estate gifts from retirement accounts. A combination of state and U.S. federal income taxes and estate taxes can diminish the retirement savings accounts of many individuals after their passing. Where estate planning to provide for heirs involves a variety of assets, it may be helpful to know that all taxes on Individual Retirement Accounts (IRAs), and other retirement accounts, can be avoided on amounts left to The First Church of Christ, Scientist, whereas those same assets left to heirs may incur significant taxes. Retirement accounts can also be left to a charitable remainder trust, or to fund the establishment of a gift annuity that pays income to family members, with later benefit to the Church.

How to make an estate gift from a retirement account. To include the Church as a beneficiary, please contact the trustee or custodian of your retirement account and request a beneficiary designation form. You can name the Church to receive all or part of the account, or as a contingent beneficiary in the event that the primary beneficiary passes on before you. If you are married, your spouse’s written consent will be required to make a charitable gift of retirement benefits, except for benefits from an IRA. Another option is to make the Church contingent beneficiary of a retirement plan, but then granting to the heirs the right to disclaim (decline) part or all of their share, which would then pass to the Church free of taxes.

To make a gift from your IRA, please call our office to ensure the law has been renewed, then contact your IRA trustee or custodian. Tell the custodion that you wish to have a distribution check issued in our name and mailed to our office with a note identifying you as the donor. It’s important that you notify us so we can coordinate with your IRA administrator to ensure that you receive the necessary receipt.

IRA gifts may have special appeal for:

  • Friends who wish to reduce required minimum distributions in future years. A large IRA charitable contribution ($100,000 maximum) will trim down the size of your IRA so that required minimum distributions will be reduced in the future.
  • People who want to reduce taxes on their estates. IRAs are subject to both income taxes and estate taxes after the owner dies, resulting in overall taxes of 60% or more. Making qualified IRA gifts avoids these taxes.
  • Donors who can’t deduct all their contributions. The most a person can deduct for charitable gifts in any year is 50% of AGI (excess deductions can be carried over for up to five years). But gifts made directly from IRAs aren’t considered under this 50% limitation, which allows extra tax benefits for friends who wish to make large gifts this year.

Are you not eligible to make IRA gifts? People of any age can name the Church as partial or 100% death beneficiary of an IRA, 401(k) or 403(b) plan or other retirement account and avoid both income taxes and death taxes that may be payable by your heirs. You also can leave your retirement account to a trust that will pay income for life to a spouse or other family member, with later benefit for our ministries.

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Planning considerations

Retirement accounts, such as 401(k) plans, 403(b) plans and Individual Retirement Accounts (IRAs), are generally viewed as the better assets to leave through an estate plan to charitable organizations.

How to proceed

Making The First Church of Christ, Scientist the beneficiary of a retirement account is essentially a matter of completing a beneficiary form provided by your account manager.