ACES Office of Advancement

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Retirement Assets

Income Tax Consequences

Gifts made during a donor's lifetime from retirement plans are generally not advantageous from a tax perspective. The donor is taxed on distributions from retirement plans at ordinary income tax rates upon withdrawal, even if they are given to charity. The donor receives a deduction equal to 50% of the adjusted gross income for this gift.

Estate Tax Consequences

When transferred to a charity, gifts from retirement assets are excluded from the donor’s estate. Because distributions from retirement assets to non-charitable beneficiaries are taxable, there may be tax advantages to using retirement plan assets to fund charitable intentions in a donor’s estate plan.

As stated earlier, many gifts from retirement plans are done via a bequest.  To make the UIF the beneficiary of a portion of or your entire retirement plan, please contact your plan administrator for a beneficiary designation form.  If you are married, your spouse may be required to sign off on the designation due to federal laws governing spousal rights on retirement property. The UIF or the ACES Office of Advancement is happy to assist you with completing the paperwork.

Questions?

Contact the College of ACES Office of Advancement at 217-333-9355 and ask to speak with a major gift officer.