A gift of retirement plan assets can be a surprisingly easy way to reduce potentially very high taxes and provide support to Bucknell University.

A gift of retirement plan assets could be right for you if:

  • You have an IRA or qualified retirement plan, such as a 401(k) or 403(b)
  • You do not expect to use all of your retirement plan assets during your lifetime
  • You have other assets, such as securities and real estate that you want to pass to heirs
  • You want to provide payments to loved ones after you are gone
  • You would like to make a bequest gift to Bucknell University

Option 1: Make a tax-free gift today with an IRA charitable rollover 
You can make an immediate tax-free gift by transferring up to $100,000 directly from your traditional IRA to Bucknell University (other qualified retirement plans such as 401(k)s and 403(b)s are not eligible). You must be at least 70 ½ years old to take advantage of this opportunity. 

The benefits of an IRA charitable rollover gift include:

  • Satisfying the required minimum distribution
  • Avoiding income tax on IRA withdrawals
  • Supporting the mission of Bucknell University with a tax-free gift

Option 2: Designate remaining retirement plan assets for Bucknell University
Another attractive option is to designate Bucknell University as the recipient of some or all of what’s left in your IRA, 401(k), 403(b) or other qualified plan when it ends.    

In addition to the satisfaction of making a significant gift to Bucknell University, your benefits include:

  • Making a gift completely free of federal and state taxes that can total 37.0% or more, if your estate exceeds the applicable exemption
  • Preservation of non-retirement plan assets for family
  • Qualify for membership in our Bertrand Society

Option 3: Designate remaining retirement plan assets for a life income plan
Alternatively, you can designate that some or all of the assets remaining when your IRA, 401(k), 403(b), or other qualified plan ends be used to fund a gift arrangement that will make payments to family members or other loved ones for the rest of their lives. When the gift arrangement ends, what is left will go to Bucknell University.

In addition to having the satisfaction of making a significant gift to Bucknell University, your benefits include:

  • Potentially saving federal and state taxes
  • Preserving non-retirement plan assets for family
  • Providing payments to family or other loved ones for life
  • Qualify for membership in our Bertrand Society

Show More Details

Hide Details

IRAs and qualified retirement plans
Retirement plan assets are a major source of wealth for many households. For example, you may have hundreds of thousands of dollars invested in your IRA, 401(k), 403(b), or other qualified retirement plan. These plans defer income and capital gains tax realized by their investments until you take distributions from the plan, allowing the assets to grow faster than investing these same assets in a taxable account, such as a brokerage or bank account. This allows their assets to grow faster than if you held and invested these assets outside of your retirement plan.

The primary purpose of your retirement plan is to provide you with income during your retirement, but it can also be an excellent source of funds for making charitable gifts during your life and when your plan ends.

Withdrawals are taxed as income
With the exception of the Roth IRA, the money used to fund a qualified retirement plan, such as a traditional IRA, 401(k), or 403(b), has never been taxed. Also, earnings that occur within a qualified retirement plan are not taxed. As a consequence, withdrawals from any of these plans (except for the Roth IRA) are taxed as ordinary income. Your federal income tax alone on a withdrawal from one of these plans could be as high as 37%.

Withdrawals are required once you reach 70 ½ years old
You must start taking withdrawals from your qualified retirement plan once you reach 70 ½ years old. The amount you must withdraw each year is a percentage of the value of your retirement plan as of the last day of the previous year. The percentage starts below 4% for someone who is taking their first “required minimum distribution” and increases with age according to a schedule published by the IRS. 

Taxes on remaining retirement assets can be very high
Your family members and other heirs will have to pay income tax on any distributions they receive from your retirement plan after you are gone. In addition, your qualified retirement plan is included in your estate, so if your estate is large enough to owe estate tax, your plan may increase the federal estate taxes you owe. 

Federal income tax alone can be 37%. When you add federal income tax and estate tax together, they can total 62% or more. In states that assess their own taxes on estates, the total taxes on retirement plan assets paid to heirs can be over 62%.

Give retirement plan assets to Bucknell University and save taxes
In contrast to your retirement plan assets, your estate will not owe income tax on most of its other assets in addition to estate taxes that may be due. As a result, your estate and heirs will pay lower taxes if you pass your less heavily taxed assets to your heirs, and give your retirement plan assets to charity. Paying lower taxes will mean that more assets will reach your heirs. How much more will depend on the size of your estate, where you live, and the type of gift you make.

How do I make a gift of retirement plan assets to Bucknell University? 
You have several good options to make a gift of your retirement plan assets to us.

Option 1: Make a tax-free gift today with an IRA charitable rollover 
You can make a tax-free gift by directing the administrator of your traditional IRA to transfer funds directly from your plan to Bucknell University. 

When you make an IRA charitable rollover gift, also called a Qualified Charitable Distribution (QCD), the distribution is not counted as taxable income. If you take the distribution and then make a gift of the same amount to Bucknell, the distribution will be included in your taxable income. Even if you are able to use the charitable deduction available from your gift, you may incur more tax overall utilizing this strategy. As always, consult your tax advisor to determine the best method for your specific circumstance. You cannot make a IRA charitable rollover gift from other qualified retirement plans, such as SIMPLE or SEP IRAs, 401(k)s, or 403(b)s. 

Another great feature of an IRA charitable rollover gift is it counts toward satisfying your annual required minimum distribution.

The benefits of making an IRA charitable rollover gift include:

  • Your withdrawal is not included in your income so it doesn’t affect your taxes
  • Your withdrawal counts toward your required minimum distribution for the year
  • You have the satisfaction of providing immediate support to Bucknell University

There are several requirements you must meet in order to make an IRA charitable rollover gift to Bucknell University:

  • Your distribution must be from your IRA
  • You must instruct your IRA administrator to make a distribution directly to Bucknell University
  • You must be at least 70 ½ years old
  • The total of all your qualified charitable distributions for the year must be no more than $100,000
  • Your distribution cannot be made to a donor advised fund, private foundation, or supporting organization
  • You cannot receive any benefit in exchange for your gift such as using it to fund a life income gift

Option 2: Designate remaining retirement plan assets for Bucknell University
The simplest and most common way to give retirement plan assets is to make Bucknell a designated beneficiary of your retirement plan. All you need to do is file a new beneficiary designation form with the administrator of your retirement plan that designates Bucknell as a beneficiary of your plan. Filing a new beneficiary designation form with your retirement plan administrator is easy; simply designate Bucknell as beneficiary of whatever percentage of assets remaining you want us to receive.

When using this tax-savvy approach for charitable giving, make certain you designate Bucknell as beneficiary of your retirement assets in order to avoid potential income and federal estate tax owed by your estate; naming your estate as beneficiary will not have the same favorable result.

Please identify us on the form with our legal name: Bucknell University, One Dent Drive Lewisburg, PA 17837  and include our Federal Tax Identification Number: 24-0772407

Option 3: Designate remaining retirement plan assets for a life income plan
Retirement plan assets can be directed to us through a life income plan, such as a testamentary charitable gift annuity or testamentary charitable trust. Retirement assets used to fund a life income plan upon your death allows you to provide an income stream to loved ones after you are gone and the remainder to support to Bucknell. Here is how a testamentary life income plan works:

  • Your retirement plan transfers the designated portion of its final balance to the life income plan that you have indicated on your beneficiary designation form
  • The heirs you have chosen receive payments from the plan each year, typically for life
  • When the life income plan ends, its remaining principal goes to support Bucknell University

Using retirement plan assets to fund a life income plan postpones income tax and reduces estate tax on these assets, if your estate is subject to estate taxes. A typical result is to reduce total taxes on your retirement assets by more than half compared to distributing them to your heirs through your estate.

Life income plan options 
There are several life income plan options to choose from. The one that is right for you will depend on a variety of factors. Please contact us if you would like to learn more about funding a life income plan with assets from your retirement plan.

Example

Samuel, 75, is a retired business executive who has accumulated $500,000 in the retirement plan that he set up through his company years ago. He takes minimum distributions from his plan in order to preserve as much tax-free growth inside the plan as he can. At this rate, he expects that his account may still be worth $500,000 when he dies.

Samuel has reached the time in his life when he has begun thinking about the legacy he wants to leave behind after he is gone. He decides to create a named endowed fund that will last in perpetuity. To accomplish this goal, he designates 40% of the final balance in his retirement account to Bucknell.

Benefits

  • There will be no income tax or estate tax on the $200,000 of Samuel's retirement plan assets that are transferred to Bucknell University. If Samuel were to pass the same amount to his family and make his charitable gift with stock instead, his family would owe income tax of $74,000 (37% bracket) on the IRA assets, leaving only about $126,000 for their own use. There would be even greater tax savings if Samuel's estate were large enough to pay estate tax.
  • Samuel has ensured that a permanent endowment bearing his name will support Bucknell long after he is gone.
  • Samuel will be recognized as a Bertrand Society member during his lifetime.

 

Recent Giving News


Close

Places I've Been

The following links are virtual breadcrumbs marking the 27 most recent pages you have visited in Bucknell.edu. If you want to remember a specific page forever click the pin in the top right corner and we will be sure not to replace it. Close this message.