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Everyone Wins With a Gifted Retirement Fund
The numbers come from Jerry, who, at the time of his death, has the majority of his assets in an IRA and a bank CD. Jerry’s IRA has a value of $200,000 and the CD a value of $100,000. Jerry’s will states his desire to gift $200,000 to his favorite charitable organization, with the remainder of the $300,000 going to his heirs.
|Charitable Bequest||IRA to Charity|
|IRA Transfer to your Org||- 0 -||$200,000|
|Income Tax on IRA (35%)||$70,000||- 0 -|
|Charitable Bequest||$200,000||- 0 -|
|Remainder to Heirs||$30,000||$100,000|
- By naming the charity as the beneficiary of his IRA, Jerry saved his heirs $70,000 in tax.
- Jerry must rely on his advisors to accomplish his objectives as the rules regarding IRA’s are complex.
- This example shows income tax savings only. For larger estates, there very well may be estate tax savings, too.