More about Gifts of Retirement Plans

When you plan your estate, it may seem natural to designate a family member as your successor beneficiary, and use other assets to make a charitable gift. But using retirement assets to make your donation and leaving other assets to your heirs enables you to give more to your heirs.

Why gifts of retirement assets an efficient way to give?

Nonprofit organizations are not required to pay income tax on the distribution (nor will the gift be subject to estate tax). The entire gift amount, from your 401(k) or other qualified retirement accounts, comes to the Mercy Foundation, and your heirs will benefit from a reduced estate-tax burden.

Can I use retirement assets to fund a charitable life-income arrangement?

Yes! However, you are strongly encouraged to seek counsel specializing in charitable trusts and estate planning. If you are considering a lifetime transfer of retirement assets to such a plan, you will need to withdraw your assets, pay the required taxes, and then contribute them to a life income arrangement. You will receive a charitable deduction that will, in part, offset the taxes you owe.

What other points should I keep in mind?

• With the exception of IRA gifts, be sure to direct the gift to the Mercy Foundation on your plan's beneficiary designation form – rather than through your will. If you fail to do so, the assets will be included in your taxable estate.
• Don't use the balance in your retirement account to satisfy a specific dollar-amount bequest already in your will. Your estate will be treated as having received taxable income in the amount of the bequest paid by the retirement plan assets.
• You may make the Mercy Foundation a partial beneficiary of your plan and direct the balance to your heirs.

How do I make a gift of my retirement account assets?

Be sure to get your plan administrator and attorney's advices. Contact the Mercy Foundation to ensure that your plans are fulfilled.

For assistance with this gift plan, please complete the request information form or contact the Mercy Foundation at (209) 564-4200 or e-mail to MercyFoundationMerced@DignityHealth.org.

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