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Why It’s Smart to Name a Charity as the Beneficiary of Your Retirement Plan

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Are you looking for a straightforward way to support charities through your estate but also reduce the tax impact on your heirs? If so, look no further than your retirement accounts, such as an IRA, 401k or 403b. There is often a substantial tax benefit to leaving a gift to charity out of your IRA rather than through your will.

Why? Because in most cases withdrawals from traditional IRAs or other tax-deferred retirement account are subject to ordinary income-tax rates. That means that any of your heirs who would inherit those accounts would have to pay taxes on withdrawals.

However, these heirs would not pay income tax on most other assets that they would receive through your will or trust. For this reason, many people choose to support their favorite charities through their retirement accounts and to support their heirs through other non-retirement assets.

For more information on tax-efficient ways to include TFAS and other charities in your estate, please contact Ed Turner at eturner@TFAS.org or 202-986-0384, or visit www.TFAS.org/Legacy.

The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.

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