Retirement Plan Assets
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(IRA's, Pension, Profit Sharing)
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| 70½ Charitable Distributions |
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| The passing of the Pension Protection Act allows taxpayers to make IRA distributions directly to a qualified charity without including the distribution in gross income. These distributions will also satisfy the Required Minimum Distribution rules. This law permits up to $100,000 to be contributed directly from an IRA to charity for the 2006 and 2007 tax years. The following conditions apply: |
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| • The IRA account holder must be 70 1/2 or older |
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| • Eligible organizations are public charities described in IRS section |
| 170(b)(1)(A), excluding donor advised funds and an organization described |
| in 509(a)(3) |
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| • The distribution will be eligible to the degree that it would have been included |
| in gross income |
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| • The full amount would have been allowable for a charitable contribution, under |
| present law |
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| • Must be a direct transfer from the IRA Trustee to the charity; cannot write a |
| check and then be reimbursed by the IRA |
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| Gift of Retirement Assets Can Benefit Donor and St. John Vianney |
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| Did you know that most of your retirement plan assets face double taxation? If you leave the assets to your heirs, you will generate "income in respect of a decedent." Not only is the amount diminished by estate taxes, but the recipient also must pay income taxes on it! |
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| If you can make other provisions for your family, there is a better option for your retirement plan assets—a charitable gift. |
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| Example: |
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| Jim is considering adding a charitable bequest to his will, with the residue of his estate passing to his children. Instead, he could consider naming the charitable organization as beneficiary of his profit-sharing account. Then the death benefit passing to the organization will not only qualify for the estate tax charitable deduction, but will also pass free of any income tax obligation. His children will benefit from this change because, rather than receiving the profit-sharing account proceeds that are subject to income tax, they will receive other assets of his estate that are free of income taxes. |
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| Benefits |
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| • Naming St. John Vianney the primary beneficiary avoids all income and |
| estate taxes |
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| • Partial savings when you give St. John Vianney a specific amount |
| before giving your family the remainder |
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| • Naming St. John Vianney the contingent beneficiary allows for greater |
| flexibility |
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| • Donating retirement plan assets could be the most cost-effective gift |
| you can make |
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| Be assured that donating your retirement plan assets is not an "all or nothing" proposition. You can name St. John Vianney the primary beneficiary or the secondary beneficiary. It is also possible to specify a fixed amount for the church, with the balance designated for other heirs. If you are interested in this method of making a gift, check with the administrator of your plan for the appropriate form to transfer ownership. Make sure you keep the form with your valuable papers. |
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