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Making a charity such as Vermont Adaptive Ski and Sports a beneficiary of your IRA account is simple – and it’s also tax-smart.
Why is it simple? Because you can name Vermont Adaptive Ski and Sports to receive all or a percentage of your IRA through a Beneficiary Designation Form (or a Change of Beneficiary Designation Form) with your IRA Custodian. (That’s the financial institution that manages your IRA.)
Though we always recommend that you consult with your attorney or other professional advisor when making major financial or estate planning decisions, you would not have to pay an attorney to revise your will in order to designate Vermont Adaptive Ski and Sports as a beneficiary. That is all handled through the Beneficiary Designation Form with your IRA Custodian.
Why is it tax-smart? When you leave your IRA assets to your heirs, they are responsible for paying income taxes on what they receive. That’s because back when you established your IRA, you did not pay income taxes on that money. When your heirs receive assets held in an IRA account, it’s time to pay the piper – or, more specifically, to pay income taxes on those funds to the Internal Revenue Service. However, if the funds are left to a tax-exempt charitable organization like Vermont Adaptive Ski and Sports, no income taxes are due.
So the moral of the story is: If you leave other assets to your children or heirs, such as bank accounts, stocks and bonds, and real estate, and if you leave your IRA or 401(k) or 403(b) assets to charity, the full amount goes to the people and causes you care about!
For more information, call or email Erin Fernandez, Executive Director, at firstname.lastname@example.org or (802) 786-4991 ext. 21.