Gifts from Retirement Plans

If the largest asset in your estate is your Retirement Plan – your 401(k), IRA, Keogh, or other such account — you may be surprised to learn that the IRS requires a non-spouse beneficiary to begin immediate withdrawals and imposes income tax on these withdrawals. A spouse will also be required to pay income tax on the withdrawals, however a spouse has the option to defer the income tax until age 70 ½ .

This tax is in addition to the estate tax that will be imposed on the account. For estates fully subject to the estate tax, the result can be that 70 percent of the value of your retirement plan will be consumed in taxes before your child, relative or friend receives it.

There is a sensible charitable alternative: name Mother Jones as the beneficiary of your retirement plan, then use other assets not subject to income tax to make gifts to your heirs. We won't pay income tax on our distribution and your heirs will receive their share of your estate without the burden of extra taxes.

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To learn more about gifts of retirement plans, Email us, complete the Information Request Form, or call us at (415) 321-1700 so that we can assist you.