Pass It On
Consider a Donation of Retirement Assets
Retirement plan assets are a great way to create a fund at your local community foundation because they not only help support charitable causes important to you, but they also can provide tax relief for your loved ones.
Money in an employee retirement plan, IRA or tax-sheltered annuity has yet to be taxed. When a distribution is made from your retirement plan account to a beneficiary, that person will owe federal income tax.
Consider leaving your loved ones less heavily taxed assets and leaving your retirement plan assets to CommunityGiving to create a charitable fund at your local community foundation. As a nonprofit organization, we are tax-exempt and will receive the full amount of what you designate from your plan. You can take advantage of this gift opportunity in the following ways:
Name the charitable fund at CommunityGiving a beneficiary of your plan. This requires you to update your beneficiary designation through your plan administrator. Here you can designate CommunityGiving and the fund you create as the primary beneficiary for a percentage or specific amount. You can also make CommunityGiving the contingent beneficiary so that your fund will receive the balance of your plan only if your primary beneficiary doesn't survive you.
With the IRA Charitable Rollover, if you are 70½ years old or older, you can take advantage of a simple way to make a charitable gift and receive tax benefits in return. You can give up to $100,000 from your IRA directly to a qualified charity such as CommunityGiving without having to pay income taxes on the money. However, the legislation does NOT permit direct transfers to donor advised funds but can be used for other types of funds at The Foundation.
Fund a testamentary charitable remainder trust. When you fund a charitable remainder trust with your heavily taxed retirement plan assets, the trust will receive the proceeds of your plan. The trust typically pays income to one or more named beneficiaries for life or for a set term of up to 20 years, after which the remaining assets in the trust would go to support a fund you create at your local community foundation. This gift provides excellent tax and income benefits for you while supporting your family and charitable causes important to you.
A donor advised fund. When retirement plan assets pass to your heirs, distributions are taxed as ordinary income. This income tax burden can be substantial, greatly reducing the value of the intended gift. Instead, you can designate your donor advised fund at your local community foundation as the beneficiary of all or a portion of your retirement plan assets at death and then name your children or heirs as advisors to the fund. Your fund receives the full amount of the gift and bypasses any federal taxes.