Gifts of Qualified Retirement Plan Assets

If you would like to get the most value from your retirement plan assets, protect your heirs from heavy taxes, and empower AJC to represent your global Jewish advocacy interests for the benefit of future generations, consider designating AJC as a partial or full beneficiary of your retirement plan.

Designating AJC as a charitable beneficiary of your retirement plan can actually provide more assets for your loved ones than if those retirement assets were left to them through your Will or Trust. Using retirement plan assets to make a planned gift to AJC is easy and tax-efficient if you have a 401(k), IRA, Keogh, or another qualified retirement plan.

When you designate your children or other heirs as beneficiaries of your 401(k), IRA, Keogh, or another qualified retirement plan, they receive only a small fraction of your plan's value, since inherited assets of retirement plans are subject to both estate and income tax. You can make a planned gift to AJC at a minimal cost to your family with retirement plan assets that would otherwise be subject to tax.

With the exception of a surviving spouse, heirs who receive distributions from another person's tax-deferred plan can be subject to as many as three different types of taxation: income tax, estate tax and, if the beneficiary is a grandchild, generation-skipping transfer tax.

Note that under current law, if you name a child as the beneficiary of your retirement assets, that child may have the benefit of deferring his or her withdrawal of funds with only minimum required distributions based upon the child's life expectancy. However, each withdrawal will still be subject to income taxes.

You may designate AJC as a beneficiary of a specific sum of money, or you may designate AJC as a beneficiary of a percentage of the remainder of your retirement-plan assets.

Please note that you will need the following information for a beneficiary designation of the remainder (or portion thereof) of a Qualified Individual Retirement Account:

Beneficiary: American Jewish Committee (AJC), 165 East 56 Street, New York, NY 10022
AJC's Federal Tax Identification Number: 13-5563393

If you wish to designate AJC as the beneficiary of your retirement account, you should consider checking with the plan administrator/sponsor and/or financial institution to determine whether it has any restrictions on designating charities as beneficiaries for retirement accounts.

If you are married, check with your plan administrator/sponsor or financial institution to determine whether or not your spouse must consent to the designation. If such consent is required, it will be necessary to obtain it in order to make your beneficiary-designation change effective.

After you submit a change-of-beneficiary request form, you should request a written confirmation of receipt to make sure that the plan administrator/sponsor or financial institution received it.

Please be sure that the individuals responsible for handling your financial affairs also receive a copy of the beneficiary designation, or know where to find it when necessary.

Creating Trusts from your Retirement Assets with Charitable Estate Plans for AJC

If you would like to make provisions for your heirs to receive a distribution stream from your retirement assets after your lifetime and for the balance to be paid to AJC at their passing, you may want to discuss alternate beneficiary designations with your tax professional, such as a qualified terminable interest property trust (QTIP) or a charitable remainder trust (CRT).

Under a QTIP, income is paid to your surviving spouse, and after his/her life income interest terminates, the balance passes to AJC as your legacy. Under a CRT, your non-spouse designated beneficiary would receive regular distributions from the trust assets each year, and the remaining balance would be paid to AJC after the lifetime interest of your beneficiary.