Many alumni and friends are surprised to learn that their heirs will receive relatively little of the balance of IRAs, 401(k) plans, and others after estate, income, and other taxes are deducted. Since retirement plans typically accumulate tax-free earnings, the balance of your retirement account is most likely subject to double taxation - income tax and estate tax. Careful planning may minimize these taxes.

Gifts through retirement plans can generate tax benefits that allow you to fulfill charitable goals and to plan for a secure retirement. This way can be especially beneficial if you have accumulated substantial retirement assets and wish to reduce income and estate taxes.

Naming the CWU Foundation as a beneficiary of all or part of your IRA or retirement plan can achieve both estate tax and income tax savings, leaving your family and loved ones assets not subject to additional income taxes. Simply use your plan's beneficiary form so the CWU Foundation can receive an outright distribution from your IRA or retirement following your death. Be sure to let your plan administrator know that the CWU Foundation is a charitable organization with the legal address posted below (tax identification number 23-7017467). Do not use retirement assets to satisfy a bequest in your will, or the estate may end up paying more taxes - use your plan's beneficiary designation form.

Life Income Gifts: If you have adequate income from sources other than qualified retirement or excess income assets, your retirement assets can be a source for making a lifetime charitable gift.

Once you reach age 70-1/2, you must begin taking minimum distributions out of your IRA or retirement plan. Income tax on minimum distributions can be offset by a charitable deduction to the CWU Foundation.

Generally, funds in qualified retirement plans grow tax-free over time, and income tax is assessed only when you withdraw from the plan. If you would like an income tax deduction, offsetting some, if not all, of the income tax due, you may want to make an outright gift to Central Washington University after withdrawing money from your retirement plan and pay the income tax on the amount withdrawn. By giving a gift in this manner you will receive an income tax break while removing a portion from your estate, thereby avoiding estate taxes.

Gifts Effective at Death: Retirement assets may be subject to income taxes in your estate. To avoid this tax you can include a statement in your will or trust to direct the "income in respect of decedent" (tax due on the income earned in your retirement plan) to the CWU Foundation. Since the CWU Foundation is tax-exempt, you avoid both income tax and estate tax and can then leave your heirs estate gifts not subject to double taxation.

You may want to transfer the balance of your IRA or retirement plan at your death to a CWU Foundation charitable remainder trust with your spouse or other heirs receiving an income for their lifetimes or a period of years. Your spouse will avoid estate tax, and other beneficiaries will have a reduction in the estate tax. In both cases, the transfer of assets would not trigger income tax upon death, and your heirs could receive more than if they had received the retirement assets outright.