Retirement Plan Gifts

Your retirement plan is designed to benefit you during your retirement. However, you may name beneficiaries for your plan in case you pass away with funds still in your account. Along with family, relatives and friends, a charity may also be named as a beneficiary. This is among the easiest and most tax-wise ways to give.

Most retirement plans are income tax-deferred, which means that you are required to pay income tax when the funds are distributed. Similarly, every dollar your heirs receive from retirement accounts would be subject to income tax (unless the distribution derives from a Roth IRA). Depending on the size of the estate, retirement funds, like other estate assets, may be subject to estate tax. However, distributions from retirement accounts to a charity such as Pacific Northwest Ballet would be subject neither to income tax nor to estate tax.

Besides tax savings, a gift of retirement assets has other advantages:

  • It is easy to arrange. You merely request a beneficiary designation form from your plan administrator. There is no need to change your will or living trust.
  • You can designate PNB as beneficiary of whatever portion you choose. For example, it might be 10 percent or 25 percent of the account. If you have otherwise provided for heirs, you could leave the entire balance to PNB.
  • The gift is revocable. You retain full control of your retirement funds should you need them, and you can change beneficiaries at any time.

If you have a retirement account, and you would like to leave a legacy to PNB to secure its future, the most tax-efficient gift you can make may be with some left-over funds in that account.

Outright Gifts of Retirement Assets

If you are over 59 ½ years of age, you might also consider an outright gift from your IRA or 401(k) or 403(b) plan. While the withdrawal will typically be a taxable event, your charitable deduction would offset the taxable income, provided you itemize your deductions and can claim the full deduction in the year you make the gift.

To find out more about naming Pacific Northwest Ballet as a beneficiary in your retirement plan, or to make an outright gift from retirement assets, please contact Lindsay Krause, Major Gifts and Planned Giving officer, Lkrause@pnb.org or 206-441-3599.

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