Qualified Retirement Accounts

Turning Your Retirement Savings into a Legacy

Although most people typically look to their will or living trust to convey a meaningful gift to their favorite charity, the truth is that this is not the only way to make a special legacy gift, and it can actually be put into effect with an act as simple as signing your name. Your qualified retirement account, such as an IRA, 40l(k), Keogh, or SEP can be every bit as powerful as a bequest, and using this type of asset for charitable purposes may even help you maximize your gifts to loved ones.

When it comes to your estate, qualified retirement plans are some of the most heavily-taxed assets you can leave to heirs. If you pass away before taking all of your distributions, the remainder may be subject to multiple taxes that can rob up to 75% of its value for those in the highest estate tax brackets. While it’s possible to roll your account over to a surviving spouse without negative tax consequences, any other individual­ whether a child, relative, or friend -will be required to pay income taxes on what they receive. This, on top of any applicable state and Federal estate taxes, can leave your heirs with as little as 25 cents on the dollar. By naming Heritage a charitable beneficiary of your account, you can ensure that 100% of your hard-earned savings will be used in support of the conservative principles you care about instead of ending up in the federal government’s wasteful hands.

Given the hefty tax consequences of leaving qualified retirement account assets to heirs, instead consider leaving your retirement assets to Heritage and using more tax-favorable assets such as cash or securities for family. Although natural instinct typically leads one to name loved ones as beneficiaries of these types of accounts, the truth is that they should be last on your list if you have other options.

You can easily make Heritage the charitable beneficiary of your IRA or other qualified retirement account by contacting your account custodian and letting them know you’d like to designate Heritage as a charitable beneficiary. Generally, all that’s required  is your signature on a change of beneficiary form. In cases where you would still like to name an individual beneficiary in addition to Heritage, it’s important to have your custodian create a separate account for Heritage as charitable beneficiary. This can be easily arranged by your account custodian.

If you would like more information or help to determine if your retirement accounts would qualify for this type of gift, please fill out the form below.

This type of gift is right for you if:

  • The individual currently named as successor beneficiary-of your retirement account is not financially de­pendent on these assets.
  • You have the option of leaving more tax advantageous assets, such as cash or marketable securities, to children or other non-spousal heirs.

Major benefits:

  • You can continue to make withdrawals as needed during your lifetime.
  • In addition to any estate taxes that may be owed, non-spousal beneficiaries of your IRA assets are required to pay income taxes on what they receive. This “double” taxation can decimate the value of your gift. Donating your IRA to Heritage and reserving more tax-favorable assets for heirs makes for smart estate planning.
  • Easy gift to arrange, since all that is generally required is your signature on a “change of beneficiary” designation. Your account custodian can provide this to you upon request.

© 2023 The Heritage Foundation | Conservative policy research since 1973

The Heritage Foundation does not provide legal or tax advice; all material is presented solely as educational information. Examples of tax benefits are based on assumptions that might not apply to your individual circumstances. We recommend that you seek the advice of your attorney, tax advisor, and financial planner in connection with all gift and estate planning matters.