RETIREMENT PLAN ASSETS

Providing financial security

While Social Security is the financial foundation for most retirees, your monthly benefit payments may be insufficient to maintain your desired lifestyle in retirement. If so, you are likely planning to use your retirement savings to close the gap between your Social Security payments and your medical and living expenses. What about the assets that remain in these accounts at your passing? With savvy estate planning, you can use your retirement accounts to support Trinity, while minimizing the taxes your loved ones would otherwise pay.

Taxes on retirement accounts

There are many types of retirement accounts - IRA, 401(k), 403(b), Keogh, others. What most have in common is that income taxes were never paid on the funds contributed to these accounts. (The exception is the Roth IRA and other Roth retirement accounts.) The IRS ultimately must be paid, however. This happens when you withdraw funds from these accounts. Likewise, loved ones who inherit these accounts are required to pay taxes when they withdraw funds from them. Should they withdraw all assets in one tax year, as is often the case, the income taxes due can result in much of the account assets being eaten up in taxes.

Minimizing taxes due from loved ones

You have the option to name beneficiaries for any assets remaining in your retirement accounts at your passing. If you have named charities to receive

gifts from your will or trust, a restructuring of your estate plan can result significant tax savings for your loved ones.

Step 1: Remove the charitable gifts from your will or trust that you will make from your retirement plans instead. This will allow more assets to pass to loved ones free of income taxes.

Step 2: Name your favorite charities as beneficiaries of all or a portion of your retirement accounts. Trinity is tax exempt, which means we will pay no income taxes on the gifts we receive from your accounts. Even if you have named loved ones to receive a portion of these accounts, you will have minimized the tax liability to heirs.

The IRA charitable rollover

If you are 70 ½ or older, consider this gift from your traditional IRA account [401(k) and 403(b) accounts are not eligible]. Your gift must be transferred directly from your IRA custodian. This IRA charitable rollover, known as a Qualified Charitable Distribution (QCD), will not be included in your taxable income and will count toward your required minimum distribution. You can give up to $100,000 per year this way.