The remainder value of many retirement accounts can be taxed heavily when left to friends and family, but they pass tax-free to SCI upon your death.
You can name SCI as sole, joint, contingent or residual beneficiary of your 401(k), Keough, or IRA account balance at time of death, avoiding both income and estate tax liability to heirs in the process. You retain control of the plan during your lifetime, and you can change your beneficiary at any time if your circumstances change. To accomplish this, you must complete or revise beneficiary designation forms with your retirement plan administrator. You may name SCI as primary or contingent beneficiary, remembering that spouses may have legal rights to plan assets. After death, retirement fund beneficiary designation forms supersede any provision for these accounts that you have in your Will.
Are you 70.5 years or older and facing a Required Minimum Distribution (RMD) from your traditional IRA, triggering capital gains tax liability in the process? If you don’t need all this income to meet daily expenses, you can take advantage of America’s generous philanthropic tax laws that help you and SCI at the same time.
By their nature, IRAs appreciate over decades on a tax-deferred basis. Late last year, Congress made permanent a statute that enables you to make a direct charitable contribution up to $100,000 annually without increasing your adjusted gross income. You can do this while avoiding capital gains tax and reducing your future taxable estate. As a 501(c)(3) nonprofit organization, SCI meets the standard for a Qualified Charitable Distribution (QCD) from your traditional IRA under the law. Contact your IRA plan administrator to request a direct distribution transfer from your account to the Seamen’s Church Institute of New York & New Jersey. (It must be an institution-to-institution transfer—if it comes to you first, you will incur a tax.)
Your IRA plan administrator should make the check payable to the Seamen’s Church Institute of New York & New Jersey, mail it to 50 Broadway, Floor 26, New York, NY 10004, and include your name in the note field so we can thank you and provide important documentation for your records.
If you have retirement assets in a 401(k) or 403(b) plan, you must first roll those assets into a traditional IRA and then make the transfer from the IRA to SCI. (Most plan administrators can do this over the phone.) SEP-IRAs and SIMPLE-IRAs do not apply. Roth IRAs have no Required Minimum Distribution during the owner’s lifetime, so this incentive is not applicable. Married taxpayers with separate IRAs can donate up to $200,000 annually, but no more than $100,000 may be distributed from each person’s IRA. The gift must be outright, meaning it cannot be used to establish a charitable gift annuity or charitable remainder trust. State tax laws vary regarding this option. As always, contact your tax advisor with any detailed questions.
You can use this vehicle to make a new gift to SCI or to pay a previous pledge commitment. Your new gift can go to SCI’s Annual Fund to underwrite daily expenses or to SCI’s long-term investment fund to sustain us for the ages.
IRA owners of any age may name SCI as primary or contingent beneficiary of the account balance at time of death, providing tax advantage to the estate. You retain control of the plan during your lifetime, and you can change your beneficiary at any time if your circumstances change. Remember that after death, retirement fund and life insurance beneficiary designation forms supersede any provision for these accounts that you have in your Will.