Planning Ahead With Retirement Accounts

Did you know that the current tax law requires you to take a distribution from your Individual Retirement Account (IRA) once you are age 70½ or be subject to tax penalties? In order to avoid paying taxes on the additional income, many choose to direct their required minimum distribution (RMD) to an organization in support of their philanthropic goals. At any age, testamentary gifts are another popular option that can provide tax advantages. This option allows you to name a nonprofit organization as beneficiary of your retirement account upon your passing.

Giving back through IRAs is a popular giving strategy within the Westminster community, particularly with those who are considering a pledge over a period of time to the School. Caroline Wilson Spangenburg '69, parent to Thomas '05 and Sarah '07, and Alan Simons '69, parent of Cate '17, recently co-chaired their 50th Reunion Gift Committee. When it came time for them to consider their personal investment in the class' efforts, they intentionally structured their personal pledge to account for the future income.

"About a year before my 50th reunion, I started giving some thought to how I could make a donation using pre-tax money," says Alan. "In the past, I had given greatly appreciated stock to Westminster and I had some knowledge about using IRA funds to make charitable donations. I was told at age 70½ I could give pre-tax IRA money to a charity. When I discovered I could make the gift over a five-year period, I decided to structure my pledge to give a substantial part of my IRA to Westminster when I turned 70½."

Henry Bowden '67, parent of Caroline '00 and Henry '04, also served as the Class Gift Co-Chair during his 50th reunion, and as part of his commitment, he chose to make a testamentary gift by naming Westminster a beneficiary of his IRA. "Based on your situation," Henry says, "it may be more strategic to name a charity as your IRA beneficiary and give other assets like life insurance and securities to family. A charity will receive the full amount, but a distribution to your child would be taxed."

Congress is currently considering legislation that may change the current IRA guidelines. Westminster's Advancement Team is monitoring those conversations and will keep you informed on the legislation's progress. If you have questions specific to your financial and philanthropic priorities, it may also be beneficial to connect with your financial advisors. To learn more about how making a gift through your IRA can create a lasting legacy at Westminster, please contact Lauren Flores at 404-609-6438 or [email protected] .