Retirement Assets

You can make a gift to Ransom Everglades by designating the school as the beneficiary of your retirement plan or IRA. It’s easy to do by completing a new beneficiary designation form with your plan administrator. There is no need to modify your will or living trust.  

IRAs and qualified retirement plans
Retirement plan assets are a major source of wealth for many households. For example, you may have hundreds of thousands of dollars invested in your IRA, 401(k), 403(b), or other qualified retirement plan. These plans do not pay tax on the income and capital gain realized by their investments. This allows their assets to grow faster than if you held and invested these assets outside of your retirement plan.

The primary purpose of your retirement plan is to provide you with income during your retirement, but it can also be an excellent source of funds for making charitable gifts during your life and when your plan ends.

Taxes on remaining retirement assets can be very high
Your family members and other heirs will have to pay income tax on any distributions they receive from your retirement plan after you are gone. In addition, your qualified retirement plan is included in your estate, so if your estate is large enough to owe estate tax, your plan may increase the estate taxes you owe. 

Federal income tax alone can be 37%. When you add federal income tax and estate tax together, they can total 62% or more. In states that assess their own taxes on estates, the total taxes on retirement plan assets paid to heirs can be over 62%.

Give retirement plan assets to Ransom Everglades School and save taxes
In contrast to your retirement plan assets, your estate will not owe income tax on most of its other assets in addition to estate taxes that may be due. As a result, your estate and heirs will pay lower taxes if you pass your less heavily taxed assets to your heirs, and give your retirement plan assets to charity. Paying lower taxes will mean that more assets will reach your heirs. How much more will depend on the size of your estate, where you live, and the type of gift you make.

Example

Tim Hong, 75, is a retired business executive who has accumulated $500,000 in the retirement plan that he set up through his company years ago. He takes minimum distributions from his plan in order to preserve as much tax-free growth inside the plan as he can. At this rate, he expects that his account may still be worth $500,000 when he dies.

Tim has reached the time in his life when he has begun thinking about the legacies he wants to leave behind after he is gone. He decides to leave a bequest to Ransom Everglades School to create an endowed fund that will perpetuate generous support in his name. To accomplish his goals, he designates 40% of the final balance in his retirement account for Ransom Everglades School.

Benefits

• There will be no income tax or estate tax on the $200,000 of Tim's retirement plan assets that are transferred to Ransom Everglades. If Tim were to pass the same amount to his family and make his charitable gift with stock instead, his family would owe income tax of $74,000 (37% bracket) on the IRA assets, leaving only about $126,000 for their own use.  There would be even greater tax savings if Tim's estate was large enough to pay estate tax. 
• Tim has the immediate satisfaction of knowing that he has put a gift plan in place that will keep his name alive and support Ransom Everglades School long after he is gone.