University of Texas at Austin

Make the Most of Your Retirement Plan Assets

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Avoid Taxation and Support Our Work How Retirement Accounts Are Taxed Qualified retirement plans receive favorable income tax treatment during your lifetime. No federal income tax is owed on the funds as they are contributed, and no federal income tax is owed on the earnings and appreciation while in the plan. You pay taxes on the funds only when you withdraw them. And giving the account balance to individual heirs exposes them to federal income taxes up to 37 percent on the funds. Your retirement dollars can be seriously depleted by this taxation. Do More With Your Retirement Account If you've thought about contributing to The University of Texas at Austin, consider giving IRA assets to us and giving other assets that are not as heavily taxed to family members. As a nonprofit organization, we are tax-exempt, so we can use 100 percent of your retirement plan assets. Upon death, your account can pass directly to us as your primary beneficiary. Or, it can be used to pay an income to someone you name for his or her lifetime, after which the remaining assets pass to us. EXAMPLE Bill is considering adding a charitable gift to his will, with the residue of his estate passing to his children. If he decides instead to name The University of Texas at Austin as beneficiary of his IRA, the death benefit passing to us will pass free of any income tax obligation. His children will benefit from this change because, rather than getting the IRA proceeds that are subject to income tax, they will receive other assets of his estate that are free of income taxes. Did you know that retirement accounts are exposed to federal income taxes that could be as much as 37 percent upon your death? The good news is that these taxes can be eliminated or reduced through a carefully planned charitable gift. beneficiary: an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

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