Charitable Strategies to Help Your Clients


Estate Planning with IRA Beneficiary Designations

In our last issue, we focused on IRA charitable rollovers and how The PATH Act made permanent the Charitable IRA Rollover provision of the Pension Protection Act of 2006 allowing a taxpayer age 70 1/2 or older to “roll over,” or transfer, to qualified charities up to $100,000 annually from his or her individual retirement account (IRA) or Roth IRA and have that amount excluded from income for federal income tax purposes.

In this issue, we want to share how an IRA beneficiary designation can be an easy and effective charitable tool to use as part of your clients’ estate planning. Because traditional IRAs and other retirement accounts are exempt from income tax during their owners’ lifetimes, they are considered “income in respect of a decedent” (IRD) assets and subject to estate as well as income tax to make up for the absence of taxation while the IRA owners were alive. Consequently, this potential double taxation of IRAs and other retirement accounts makes them ideal candidates for charitable gifts. IRA owners may designate any public charity, donor-advised fund, supporting organization, charitable remainder trust or charitable gift annuity as the beneficiary of their IRA.

Local financial planner Susan Elser, Elser Financial Planning, Inc., and estate planning lawyers, Alexis Sumner, Bose McKinney & Evans, and Brad Cohen, Cohen Garelick & Glazier, each recently have had clients name their CICF funds as the beneficiary of one or more of their respective IRAs or qualified retirement accounts. According to Elser:

Naming a charity as a beneficiary of a traditional IRA is probably the easiest and most tax-efficient way to make an estate bequest to charity, and the least impactful to heirs. The owner simply needs to complete a change of beneficiary form for an IRA, naming a charitable organization any percentage beneficiary, and that charity will receive 100% of their share. No change in the owner’s will is needed. Their heirs will pay federal and state income taxes when they withdraw their share of a traditional IRA, and the owner’s estate may also have had to pay estate taxes on an IRA if it was a taxable estate and the IRA passed to heirs.

Keep in mind, a married client may want to transfer IRA plan assets to the surviving spouse first, and then to charity. Additionally, a spouse likely has a legal interest in the retirement assets and will be required to waive survivor rights in favor of a charitable organization or a charitable remainder trust.

If you would like more information on IRA beneficiary designations please contact Mary Stanley, director of gift planning and legal affairs, at 317-634-2423 x319 or

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