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Donating Retirement Assets

For many people, monies accumulated in IRAs or employer retirement plans may be the most significant source of wealth amassed during their lifetime.

Retirement accounts increasingly have become the resource of choice for individuals who wish to make charitable bequests. IRAs and qualified employer retirement plans such as 401(k)s or 403(b)s often represent a donor’s “deepest pocket” for giving – as well as an easy, tax-efficient way to fund your legacy.

How to Leave Money to Charity

Donating an IRA or other retirement plan monies to charity can be a tax-smart estate planning strategy. When done properly, charitable donations of tax-deferred retirement assets can reduce the amount of income taxes owed both by your estate and by individual heirs.

  • When you name a qualified charity as a beneficiary on your retirement plan, neither you, your heirs nor your estate have to pay income taxes on those assets gifted after your death.
  • Because qualified charities do not pay income tax, 100% of your gift will directly benefit the programs supported by your charity. A qualified charitable organization is a tax-exempt, non-profit business that meets the requirements of section 501(c)(3) of the Internal Revenue Code.
  • There is no need to update or revise your will or living trust to make a planned gift of retirement assets to your favorite charity.
  • You can quickly and easily create your charitable legacy by completing a Beneficiary Designation form for each retirement account you wish to donate in whole or in part. These forms are available from your IRA custodian or from your retirement plan administrator.
  • It is possible to divide your retirement assets between charities and individual heirs, using any percentage allocation that you choose.
  • You will need to identify the qualified charity on the Beneficiary form by listing the charitable organization’s full name, legal address and tax ID number. Indicate on the Beneficiary Designation form that the beneficiary is a charity. Beneficiary forms for some popular brokerages are provided below.
  • Should you wish to name a charity as all or part of the primary beneficiary on your employer retirement plan and you are married, please note that your spouse’s written consent will be required on the Beneficiary Designation form.
  • Once the designated beneficiary forms are in place, retirement assets will generally pass directly to your beneficiaries (both heirs and charities) without the cost and delay of probate.
  • You can change beneficiaries on a retirement account at any time by completing a new Beneficiary Designation form.

Should you have further questions, please contact:

Erin McGuirl, BSA Executive Director
67 West St. Suite 401 Unit C17
Brooklyn, NY 11222

BSA Tax ID 13-1632509

The Bibliographical Society of America does not provide tax or legal advice. This information is for educational purposes only and does not provide individually tailored advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a specific strategy will depend onan individual’s circumstances and objectives. Tax laws are complex and subject to change. Individuals should consult with their attorney for matters involving estate planning and with their personal tax advisor for matters involving tax planning.