Donating Retirement Assets

Leaving a share of your retirement assets to The Cedars is relatively simple – and very tax-efficient.

By retirement assets, we are referring to traditional IRAs, 401(k) accounts, and 403(b) accounts. And to understand why donating those assets is so tax-wise, you need to remember that you never paid any income taxes on the money you put into these funds. The problem, as you know, is that when you take the funds out in your retirement, you then have to pay federal income taxes.

If you leave these funds to your children or other heirs, then they will have to pay income taxes on whatever they receive. Unlike funds they would receive from your regular assets – bank or brokerage accounts, real estate, or artwork – your heirs would have to pay income taxes on what they receive from your retirement accounts.

This means that if you want to leave something to charity upon your death, the most tax-efficient way to do so is to use your retirement accounts.

It’s relatively easy to leave retirement assets to The Cedars. Though we always recommend that you seek professional legal and financial advice in considering any planned gift, you can leave retirement assets to The Cedars without having to pay your attorney to revise your will. All you need to do is to contact the administrator of your retirement funds – that is, the financial services firm, bank, or trust company that manages your retirement funds – and fill out the beneficiary designation form.

On that beneficiary designation form, you would name “The Cedars, a Maine non-profit corporation, 630 Ocean Avenue, Portland, Maine” as the beneficiary of a certain percentage of that particular retirement fund. (In the beneficiary designation, the beneficiaries – whether charitable or non-charitable – always receive a percentage of the fund, not a dollar amount.)

You could also choose to name The Cedars as a “contingent beneficiary.” That means that if one or more persons named as a primary beneficiary predeceases you, then that part of your retirement assets can go to The Cedars.

For more information on naming The Cedars a beneficiary of your retirement funds, contact Tracy Ericson, Associate Director of Development at (207) 221-7007 or tericson@thecedarsportland.org.