How Multiple Taxes Affect Retirement Accounts:
Retirement accounts held at death are includible in your taxable estate. Depending on the availability of exemptions and deductions, the estate tax rates on such accounts can be as high as 55%. In addition, not only will the assets be subject to estate taxation, any assets in the retirement accounts at death will ultimately be subject to income tax upon withdrawal by the beneficiaries (or earlier, depending on the circumstances). Combining the estate tax costs with the income taxes, up to 85% of the retirement accounts you worked so hard to build could be lost. Put another way, at the highest brackets, only 15% of the assets are left for your beneficiaries.

Bequeath Your Assets Wisely:
These high taxes can, however, be avoided. Because retirement accounts are subject to both estate taxes and income taxes, they are ideal candidates for charitable giving.

For example, let's assume that an individual has a net worth of $500,000 including a $250,000 IRA and wishes to make a $250,000 charitable gift to the School Sisters of Notre Dame at his death and leave the rest of his assets to his children. If the IRA goes to the children, the charitable gift will still equal $250,000 and be satisfied from the other assets. The children, however, get only what is left of the $250,000 IRA after federal income taxes are paid. The exact amount of income tax will depend on the length of the pay out and the children's income tax brackets. At the highest rates, assuming all assets are withdrawn at once, these taxes could equal $99,000 (39.6% x $250,000) plus any state income taxes.

If, on the other hand, the donor left the IRA to the School Sisters of Notre Dame, the results are differ- ent. Because the School Sisters of Notre Dame is a charitable organization not subject to income tax on assets distributed from the IRA, it gets the full $250,000 to spend unreduced by income taxes. The children, however, get the $250,000 because the assets they receive are not subject to income taxes. The total benefit of leaving the IRA to the School Sisters of Notre Dame is the $99,000 of taxes which would otherwise have been paid by the children. If the donor faced estate taxation, the sav- ings could be even greater.

Benefits of Donating Retirement Accounts:
By naming a charitable organization such as the SCHOOL SISTERS OF NOTRE DAME, MILWAUKEE PROVINCE, INC. as beneficiary (either at your death or upon the death of the survivor of you and your spouse) you can shield your retirement accounts from being consumed by estate taxes or income taxes. In other words, it is possible to have 100% of your retirement account go to support the important work of the sisters and other charities that matter to you.

Naming the SCHOOL SISTERS OF NOTRE DAME, MILWAUKEE PROVINCE, INC. as a beneficiary of your retirement accounts is as simple as completing a change of beneficiary form that your account manager can provide you.scribed by law and the regulations for charitable remainder or lead trusts.

For More Information Call, Write, or Email:

School Sisters of Notre Dame
Planned Giving Office
13105 Watertown Plank Road
Elm Grove, WI 53122-2291
Phone: (262) 787-1034 Fax: (262) 207-0050
Email: ssndpg@ssnd-milw.org

This is not intended as legal advice; for that, consult your attorney or tax advisor.