Qualified Retirement Plans

Saving for retirement with an Individual Retirement Account (IRAs), 401 (k), Keogh, or other retirement account is very common. These saving are meant primarily for your own benefit during retirement, but it is very likely that at least some of this money will be left upon your death. It is important to understand how those assets can be taxed.

Any of these retirement plans may be left to a spouse without incurring estate tax. However, whatever is left at the end of your surviving spouse's lifetime is included in their taxable estate.

If you are single or widowed, these plans are included in your taxable estate. When left to family members or other individuals, these plans are taxable to the recipient as income. Since the assets have built tax-free, tax is due on this income and is the responsibility of the recipient. As a result of estate and income taxes owed on retirement accounts, an individual named as the beneficiary could receive only about 25-35 percent of the total in the retirement account.

Retirement plan assets are the topic of much discussion and pending legislation. If your estate is taxable, if you would like to pass assets on to another individual without the imposition of income tax, or if you plan to leave bequests to both heirs and charity, you may want to consider making charitable gifts from your retirement plans with gifts to heirs from other assets. Planning your estate this way may help you to provide the most benefit to those persons and organizations you wish to include in your will.

For more information and details about gift planning, call Renee Rehfeld, assitant vice president for development, 830-372-8030 or fill out a request form.