Retirement accounts comprise a significant part of most people’s net worth. As many people know, when distributions are made from a retirement account to a beneficiary following the owner’s death, the distributions are taxable income to the recipient. For clients wishing to make a charitable donation at death, they should consider naming the charity as a direct beneficiary of their retirement account. The charity receiving the retirement funds does not pay income tax because it is a tax-exempt organization, and the client can pass other non-retirement assets to non-charitable beneficiaries, which may not carry a related income tax liability. For clients with large retirement accounts and significant charitable intentions, this can be a powerful tool to minimize income tax paid by beneficiaries, while significantly benefiting their charity of choice.
For more information on using retirement accounts to accomplish charitable objectives, please call Tip Richmond in our Lexington, Ky. office at 859-899-8712 or Jeff Gehring in our Lexington, Ky. office at 859-899-8713.