Skip to main content

Retirement Assets

A retirement plan is one of the best types of assets to transfer to a charity because it produces taxable income. Most assets an heir inherits are free of income tax. However, an heir will pay income tax on disbursements from an benefactor’s retirement plan such as a profit-sharing plan, Section 401(k) plan or IRA.
 
If you are going to make a charitable bequest, it is usually better to transfer the taxable assets subject to income tax to CACF and to transfer the assets not subject to income tax to heirs.
 
For a taxable estate over $3 million, the combination of estate and income taxes will frequently exceed 75% of the total amount — even more if the generation-skipping transfer taxes are triggered. At a cost to your heirs of only 25% of the fair market value of these type of assets, you could apply 100% of the assets to a named charitable fund to accomplish your specific charitable objectives.