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Gifts of Retirement Plans
Many
individuals today have large qualified retirement plans such as an IRA,
401(k), or Keogh plan. These assets have been growing tax-free for
years. Once the owner begins to receive payments from the qualified
plans, the distributions are taxed. The plans are also included in the
owner's taxable estate. A retirement plan may be an excellent source of
funds for making a gift to the American Red Cross.
One
way to make a gift of your retirement plan is to create a charitable
remainder trust through your will. It works like this: Your IRA assets
will be transferred to a charitable remainder trust. There is no tax
due because the charitable remainder trust is a tax-exempt entity. The
trust will provide life income to the beneficiary (for example, your
child) with an eventual gift to the Red Cross. The beneficiary will pay
income tax on the distributions from the trust. Your estate will
receive an estate tax charitable deduction for the value of the Red
Cross's right to eventually receive the trust assets.
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