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Gifts of Retirement Plans
Gift Example
How can you give more to your heirs with less? For the sake of simplicity, let's assume you have $300,000 in an IRA* and appreciated stock worth $250,000. Assuming you are in the 45 percent estate tax bracket (combined federal and state), you can see that your heirs actually receive more when you leave the lower valued gift of stock to them and name [OUR CHARITY] as the beneficiary of your IRA or other qualified retirement plan.
| IRA to Charity | Stock to Heirs | IRA to Heirs | |
| Value of IRA | $300,000 | $250,000 | $300,000 |
| Estate tax (45%) | $0 | $112,500 | $135,000 |
| Transfer to Heir | $137,500 | $165,000 | |
| Less income tax (33%) | $0 | $54,450 | |
| Remainder to charity/heirs | $300,000 | $137,500 | $110,550 |
| Total Tax | $0 | 45% | 63% |
*While the Mercy Foundation cannot receive IRA gifts, its staff will be happy to help facilitate your gift to the Sisters of Mercy ministry you choose.
What if I'm not affected by the estate tax?
The income your heirs receive from your IRA is called "Income in Respect of Decedent (IRD)." IRD is taxable upon transfer and at the donor's highest tax rate. However, the gift of stock is taxable when the heirs sell the shares. Then, the gain that occurred from the date of transfer is taxable – typically at the 15 percent tax rate.
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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