Giving Your IRA to Loved Ones? Think Carefully
While IRAs are excellent vehicles for accumulating assets for your use during retirement, much to many people’s surprise, they are a far less attractive way to pass an inheritance to loved ones. Here’s why.
The Tax Consequences of IRAs
When you name anyone other than your spouse as beneficiary of your IRA, it will be exposed to heavy taxation, leaving less for your heirs than you had hoped. Upon your death, the income tax bill can take as much as 39.6 percent, and that percentage can be even higher if your estate is subject to estate taxes.
A Charitable Solution
If you’ve thought about contributing to the University of Colorado , consider giving IRA assets to us and giving other assets that are not as heavily taxed to family members. As a nonprofit organization, we are tax-exempt, so we can use 100 percent of your IRA contribution. To get this process started:
- Decide what percentage (1–100) you would like us to receive.
- Contact your IRA administrator for a change-of-beneficiary form.
- Name CU and the gift percentage on the form.
- Return the form to your IRA administrator.
- Let us know about your plans so we can thank you. (We will also honor your preference for anonymity).
Sample IRA Designation Letters
If you have any questions about providing support to CU through your IRA, please contact Gift Planning and Leadership Giving at 303-541-1229 or firstname.lastname@example.org.
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.