Retirement Plan Gift


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 Swank MS Foundation.

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 Swank MS Foundation. 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 Swank MS Foundation's right to eventually receive the trust assets.

For example: Mrs. Edwards irrevocably transfers $100,000 to create a charitable remainder annuity trust that will provide her with life income payments. Included in the trust agreement is the stated payout percentage of 7. She will receive $7,000 annually for her life ($100,000 x 7%). If income earned by the trust exceeds the fixed payment of $7,000, the excess is reinvested.

The many benefits of a Charitable Remainder Trust include:

- receive income for life
- eliminate taxes on capital gains on the sale of appreciated securities
- receive immediate charitable income tax deduction based on your age
- remove all or most of the assets donated from your estate, thereby
- reducing potential estate taxes
- receive the satisfaction of supporting (nonprofit_name)

These types of trust allow you to attain your own personal financial objectives while making a significant gift to (nonprofit_name). The best type for you depends on your own individual needs.

A Pooled Income Fund is a type of charitable remainder trust that operates somewhat like a mutual fund, wherein your gift to the fund, along with similar gift from others, are invested in a common fund. A pooled income fund gift may be established with an amount as little as $5,000. You will receive income earned by the fund in proportion to the number of shares you have in the fund. Swank MS Foundation may use the remaining principal only after your death (and the death of one surviving beneficiary if one is designated).

For example, Mr. Simon's $10,000 life income gift is invested in our pooled income fund. The fund's net income is 6 percent this year, so he receives $600--his share of the annual earnings. Each year, Mr. Simon's payment will reflect any increase or decrease in the fund's net income.

Note: Currently, pooled income fund gift are unavailable in the states of Arkansas, Connecticut, Florida, Mississippi, Nebraska and Tennessee.

We make no claims regarding the accuracy of the above information or the tax consequences stemming from your use of it. Please consult with your own tax, legal, or financial planning advisor.