Retirement Plans

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Naming the Red Cross as a Beneficiary

To name your local chapter of the American Red Cross as a beneficiary of your 401(k), 403(b), IRA or other retirement plan, please advise your plan administrator to designate your gift to:

American Red Cross Bay Area
Tax ID # 94-3045430
85 Second Street, 8th Floor
San Francisco, CA 94105

How to Keep Your Retirement Plan Assets from Going to Taxes

The average person is saving or has saved significant amounts in his or her 401(k), IRA, Keogh or other retirement plan. Unless you plan carefully, most of the funds may be lost to taxes if you leave the funds remaining in your retirement plan after your lifetime to someone other than your spouse.

Double Tax

Because Congress intends for tax-deferred retirement plan assets to be used for a worker's retirement years, and not as a savings account to be distributed to heirs, heavy taxes can be imposed at death. If a person dies with retirement plan assets in his or her estate, those assets are subject to both estate and income taxes, which can add up to 75 percent or more!

For example, Henry Brown plans to leave his retirement account to his daughter when he dies. The retirement account will be included in Henry's taxable estate. If Henry's total estate exceeds $1,500,000, the federal estate tax rate in 2005 is as high as 47 percent. In addition, Henry's daughter will have to pay income taxes on the value of the retirement plan assets she inherits. Additional state estate taxes will further erode the account's value and federal and state governments will get most of Henry's retirement plan.

Not only is the sum of these government taxes devastating to the retirement assets, but the inclusion of the assets in Henry's estate can reduce the amount that would normally be passed to heirs from the rest of the estate because the value of the retirement assets may push Henry's estate into a higher tax bracket.


When doing your estate planning, consider your family's needs first. If you are considering making gifts to charity through your will or trust, you can avoid the double tax on retirement assets by designating charities to receive the retirement plan assets after your lifetime. The amount that goes to charity will not be subject to estate or income taxation. Leave other assets, which would not be double taxed, to loved ones.

How to Donate a Retirement Account

To leave the balance of a retirement account to the American Red Cross Bay Area after your lifetime, simply advise the plan administrator of your wish and sign the forms that your company's plan requires. For an IRA or Keogh plan that you administer personally, notify the custodian in writing and keep a copy with your valuable papers.

If you are married, your spouse is usually entitled by the plan requirements to receive the entire amount in certain qualified plans. If you have accumulated and saved other resources, your spouse may be willing to execute a written waiver to allow your charitable bequest of a retirement account. Other options are to leave your spouse as the primary beneficiary and name the American Red Cross Bay Area as the second beneficiary, or to leave your spouse as the primary beneficiary with the right to disclaim the bequest after considering the impact of taxes on the retirement assets.

Before making a gift to the American Red Cross Bay Area of a retirement plan asset, we recommend that you consult your tax advisor or attorney for full advice on the effect of your gift.

For more information or a free brochure, please contact Gary Ogburn at, (415) 427-8171, or Bill Ruettinger at, (415) 427-8989.

ęCopyright 2007, American Red Cross Bay Area Chapter. All Rights Reserved.
85 Second Street, 8th Floor, San Francisco, CA  94105 : (415) 427-8000
Photos: Gene Dailey, Elena Fava Emerson, Bonnie Gillespie.