Inheriting an IRA can also mean inheriting a tax burden. If you have an IRA that you plan to leave to a beneficiary (other than your spouse) but you don’t want them to pay more taxes, you may want to reconsider your approach to transferring wealth to your loved ones.

With passage of the SECURE Act, the beneficiary of a parent’s IRA, for example, can no longer count on a relatively straightforward and tax-savvy method of withdrawals. Instead of taking distributions over their lifetimes, affected children now need to withdraw the entire IRA inheritance within a 10-year period, as calculated under the law. 

For example, you pass away at 75, and your son or daughter inherits your IRA. They’re likely in their 40s or 50s, in their peak earning years, and possibly in a high tax bracket. The SECURE Act forces them to take all the money out of the IRA within 10 years, potentially costing them 50 percent of their inheritance in taxes.

Consider this:

• If you are charitably inclined, a charitable remainder unitrust to the Hoag Hospital Foundation can provide fixed percentage distributions to a beneficiary or beneficiaries for their lifetime or a term of years up to 20.
• The remaining assets at the end of the trust term will be paid to one or more qualified charities that you choose.
• You might also consider making a charity, like the Hoag Hospital Foundation, the direct beneficiary of your IRA and transfer wealth to your loved ones by other means.

Benefits of an IRA Charitable Rollover

An IRA charitable rollover could be a beneficial way to make a big impact on your financial planning and the future of health care at Hoag. If you are 70 ½ or older, you may also be interested in lowering the income and taxes from your IRA withdrawals.

• Avoid taxes on transfers of up to $105,000 from your IRA to the Hoag Hospital Foundation
• May satisfy your required minimum distribution (RMD) for the year
• Reduce your taxable income, even if you do not itemize deductions
• Make a gift that is not subject to the deduction limits on charitable gifts

To learn how you can realize your financial, family support, and philanthropic goals, our gift planning team is available to work with you and your estate planning advisors.

We are here to help. For more information about making a gift to Hoag, contact: Julie Heggeness, JD, CSPG, TEP Vice President, Legal & Executive Director, Gift Planning - 949-764-7206 | Julie.Heggeness@hoag.org | hoaghospitalfoundation.org

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