A Surprisingly Easy Way to Make a Big Impact
Retirement Accounts -- 401(k) and 403(b) plans, IRAs, Keoghs, and others -- will be the major source of income for many people after retirement. Contributions to these plans are often tax free and usually grow tax free.
Funds withdrawn from these plans are usually liable for income tax, and accounts in large estates may owe estate taxes as well. For accounts left to anyone other than a spouse, these combined taxes can take 70% or more of the account, leaving little for heirs.
Account assets left to Foxcroft avoid both of these taxes. Because these tax savings will pay for most of the gift, it may be more advantageous to create a legacy in this way, and leave other assets to loved ones.
If you are over age 70.5, a contribution to Foxcroft from your IRA will count toward your minimum annual withdrawal. Any part of your annual IRA withdrawal that you do not need can benefit our girls if you give to Foxcroft. You will avoid federal income tax on that gift (and perhaps state income tax as well -- ask your advisor).
These IRA gifts totaling up to $100,000 per year to charitable organizations like Foxcroft School are not counted as taxable income as long as the IRA funds pass directly from your IRA to the charitable organization.