For 32 years, Joan Black served The Bishop's School as a teacher, department chair, and dean of faculty. When she arrived in 1984 she witnessed the School's efforts toward building the endowment; recognizing the generosity of those who made the growth possible and appreciating the opportunities that were available for deserving students.
As Joan and her husband Tom were considering what type of testamentary gift to put in place for The Bishop's School, Joan's retirement plan worked perfectly as part of the strategy.
"Tom and I appreciate all that the School offers in academics, athletics and the arts, and are strongly committed to supporting The Bishop's School's Financial Aid Program."
We all want security for the future, which is why we are told to plan for retirement. Most of us hold retirement savings in assets such as IRAs, 401(k)s, 403(b)s and pensions. If you are like many people, you've held these assets for a long time and have seen them grow. Because of the way these funds are distributed, you likely will not use all of your retirement money during your lifetime. So, the question for many individuals is, "What will I do with my unspent retirement savings?"
Unfortunately, the problem with giving unspent retirement savings to family members (other than your surviving spouse) is that the majority of your savings will be taxed. First, your estate will pay tax on the asset and then your family members will pay tax at their ordinary income rate resulting in very little of your remaining money actually going to the family member. Since qualified nonprofit organizations are not subject to income tax, you can be assured that the entire amount left in the retirement plan will be put to good use.
There are a number of ways that you can include your retirement plan as part of your gifting strategy. One of the easiest ways is to make a gift of all or part of your retirement assets through your estate is with a bequest. A beneficiary designation is another option and for large plans, a testamentary charitable remainder unitrust can be established to receive the retirement assets upon your death, providing income for non-charitable beneficiaries before ultimately distributing to charity.