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Retirement Plan Assets

Tax-deferred retirement plans, such as IRAs and 401(k) and 403(b) accounts, are a major factor in financial, estate, and gift planning due to their tax-deferred nature. Since the tax is deferred on these assets, at death they are potentially subject to both estate taxes and income taxes. If the transfer of the retirement accounts to the surviving family members is not handled properly, the retirement assets could be subject to as much as a 65% combined tax.

As a result of this tax pitfall, many individuals use retirement plan assets to make gifts to Wheaton College. Since Wheaton College is a tax-exempt organization, the retirement plan assets avoid both estate and income taxes, thus preserving more of the asset for the support of the ministry of the College. 

The most efficient way to give retirement plan assets to Wheaton College at death is by naming Wheaton College as the designated beneficiary on the retirement account documents. The beneficiary designation can be for a percentage or a fixed dollar amount of the retirement account. You can insert instructions into your will or revocable living trust stating that charitable contributions should be made first from the retirement plan assets before any other assets are used. Fulfilling charitable bequests with retirement plan accounts avoids the potential taxes on these accounts.

Individuals over age 70.5 may also give from their retirement plans during their lives. They are allowed to give up to $100,000 from their IRA directly through the Qualified Charitable Distributions.