What is a low-cost way to make a tax-wise planned gift?
The answer is to name the Missionary Society of St. Columban as your beneficiary for your retirement plan or IRA!
The best way to accomplish a charitable bequest of a retirement plan or IRA is by submitting to the plan administrator a beneficiary designation form for part or all of the retirement plan or IRA. This plan simply involves naming the Missionary Society of St. Columban directly as a beneficiary of a death benefit payable under the retirement plan. The retirement plan or IRA is paid directly to the Missionary Society of St. Columban. Neither the estate nor any beneficiary of the estate is subject to income tax attributable to the retirement plan.
Below are other questions and answers about beneficiary designation gifts:
Q: Where can I find the beneficiary designation form for my plan?
A: Most forms are available directly on your IRA administrator’s website. You will need to log into your account and look at the “forms” tab. Beneficiary designation forms seem to universally require the plan owner to indicate a percentage of the account to be distributed upon the owner’s death. If the Missionary Society of St. Columban is to receive a percentage of the plan, determining and distributing that amount will be straightforward.
Q: Can I designate a specific dollar amount to the Columbans from my retirement plan?
A: A problem arises when a plan owner specifies a specific dollar amount to be distributed from their retirement plan upon their death. If other beneficiaries are to receive a percentage of the account it could lead to complications when properly distributing the remaining funds. It could also lead to estate income taxes being accessed. If a specific dollar amount is the plan owner’s wish, then it would be best to engage competent counsel to avoid distribution complications.
Q: What about my spouse?
A: The spouse of an owner of a workplace retirement account is automatically entitled to receive 50% of the account on the death of the plan owner, regardless of what the beneficiary designation says. Spousal consent of the charitable donation may be required in some cases.
NOTE: Any time you make a direct distribution from your IRA, please remind your plan administrator to identify you when sending us the distribution. That way we can properly record and acknowledge you for your gift.
Please contact your plan administrator for specific information regarding your accounts.