Your retirement plans may well constitute a significant portion of your estate, and can lead to substantial estate and income taxes payable at your death.
One way to preserve these valuable assets is to designate Gettysburg College as beneficiary of your plans. Using these assets for your charitable interests can leave other assets-which are not as heavily taxed-to your family.
You can use your IRA or other qualified retirement fund to create a permanent endowment. The assets will pass to the College free of tax, creating a lasting philanthropic legacy. Or you can create a testamentary charitable remainder trust, providing income to surviving family members for life or a term of years and reducing the estate and income taxes on the plan. When the trust payments end, your gift can be designated for the purpose of your choice, given certain applicable funding minimums. If you are currently making required withdrawals from your IRA, these distributions can make excellent outright gifts to the College. You will still include the income in your tax return, but it may be substantially offset by your charitable deduction.
Sample Illustrations:
| Bequest to Gettysburg | Bequest to Family | |
| Cash: | $100,000 | |
| IRA: | $100,000 | |
| Less income and Estate Tax on IRA*: | $50,000 | |
| NET BEQUEST: | $100,000 | $50,000 |
| ALTERNATIVE | ||
| Cash: | $100,000 | |
| IRA: | $100,000 | |
| (no income tax on IRA**) | ||
| NET BEQUEST: | $100,000 | $100,000 |
*combined amount will depend on recipient's tax bracket; can be as high as 63%; 50% used here for illustration
**nonprofit institutions do not pay income or estate tax
Planning Tip:
At age 70 and a half, individuals are required to begin withdrawing from their IRA accounts. For donors who do not need the supplemental income, this is a great asset to use for an outright gift. The tax on the donor's extra income is offset by the charitable deduction, which is equal to the amount given to the College.
300 North Washington Street · Gettysburg, PA 17325