FOUNDATION NEWS Caring for the Ministry of Grace: “Ecclesia Perpetua” September 2011 | ||||||
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Good Asset | ||||||
So, is there such a thing as a bad asset to leave to your heirs? From a tax perspective, the answer is yes! A traditional Individual Retirement Account (IRA) can be such an asset. An IRA grows in value without being taxed. The IRA is paid on death as you have directed in your beneficiary designation. However, the IRA proceeds received by the beneficiary must be reported as ordinary income. The IRA proceeds may put your heir(s) into a higher income tax bracket, and the higher the income tax bracket of the IRA beneficiary the greater the income tax paid on the appreciation in the IRA. Close to 40% of the traditional IRA could be lost to your heir(s) in income taxes. (A Roth IRA has its own rules and is generally tax free upon withdrawal. Consult your tax advisor.) If you plan to include ministry in your estate, a wise gift for ministry and for your heirs as well would be to gift the traditional IRA to ministry. You can leave all or part of a traditional IRA to the work of the Lord and help your family reduce the taxes. The ministry does not pay taxes, so it will have the full benefit of the gift. Your heirs can then receive assets from your estate upon which they pay no income (and perhaps no estate) taxes. And the gift to ministry would lower any estate taxes that might be due by means of a charitable deduction.
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the following people for donations:
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the following people for donations:
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