IRA and Retirement Plan Beneficiaries
Most retirement plans, including 401(k)s and IRAs, are income tax-deferred, meaning that income tax is not paid until the funds are distributed to you in life, or upon your death. This taxation makes retirement assets among the most costly assets to distribute to loved ones.
Because they are subject to income taxes to your beneficiaries, retirement assets make ideal gifts to tax-exempt charitable organizations such as PETA. Otherwise, the income taxes on retirement assets you leave to your loved ones can be as high as 35 percent. This means that an IRA worth $100,000 will be worth only $65,000 by the time it reaches your heirs.
On the other hand, the naming of a charity as the beneficiary of retirement assets upon death generates no income taxes. PETA is tax-exempt and eligible to receive the full amount and bypass any income taxes. This means that in the above example, PETA would receive the full $100,000 benefit.
|Learn more about the tax benefits of leaving retirement plan assets to charity.|
|Read more about what to consider when choosing beneficiaries for your IRA.|
To name or change a beneficiary, simply contact the administrator of the IRA or retirement plan for a change of beneficiary form. If you would like to name PETA as beneficiary, simply decide what percentage of the plan’s value (0 percent – 100 percent) you would like us to receive and name us (we recommend spelling out People for the Ethical Treatment of Animals), along with the stated percentage, on the beneficiary form. Then return the form to the administrator of the plan.
For More Information
Consulting an estate planning attorney is a smart investment that can save you and your family money and heartache in the long run. Please seek legal advice before deciding who will get what in your estate plan. To learn more, please contact Tim Enstice at 757-962-8213 or firstname.lastname@example.org.