Gift Planning – Retirement Assets

Qualified plans (those that have grown tax-free) often provide the greatest possible tax benefit when distributed to Webster upon death - because neither your estate nor Webster owe tax on the assets. By contrast, the same asset given to an individual will almost always create a tax liability to the recipient - and often a tax liability to your estate.

Total tax liability on these assets given to individuals can approach 70 percent. Total tax liability on these assets given to Webster is zero.

Perhaps you were previously advised that charitable gifts from retirement assets were complex. Guidelines have changed substantially - allowing these assets to easily pass to individuals, charities or a combination of each.

Retirement plan gifts can be arranged by completing a simple change of beneficiary form associated with IRAs, 401(k)s, KEOGHs and Tax Sheltered Annuities. No legal fees are associated with setting up these gifts.

Special Opportunities for those over age 59 ¹/₂
Consider withdrawing an amount from a retirement account sufficient to fund a charitable gift.  While you will report the amount of the withdrawal as income this year, you can be entitled to an offsetting deduction for the amount of your charitable gifts, thereby completely avoiding tax on the amount of the withdrawal.  Consider giving these funds, as they may otherwise be largely depleted in the future by federal estate and income taxes when received by you and/or your heirs.

Limited Window of Opportunity for those over age 70 ¹/₂
You can arrange for tax-free charitable gifts of mandatory withdrawal amounts, or another sum you determine, directly from a traditional or Roth IRA up to a total of $100,000 per year in 2006 and 2007.  Regardless of whether you itemize your deductions or experience other limitations on credits or deductions, amounts distributed directly to charity are excluded from your taxable income.  Remember, however, to ask your account plan administrator to make the transfers directly to selected charitable organizations to avoid taxation.  Consider giving these funds, as they may otherwise be largely depleted in the future by federal estate and income taxes when received by you and/or your heirs.

For more information on gifts of retirement assets contact:
Ken Nickless - Gift Planning Officer at 314.968.7146.