Paying It Forward, Tax Free

By: Joan Catherine Braun

Name A Charity As One of Your IRA or 401(k) Beneficiaries

My mother was a frugal woman. She was born in the depths of the Great Depression to first generation Americans—people whose lives were governed by a fierce yearning for security. Mom dropped out of high school, but she inherited her parents’ talent for making a penny do the work of a dime. When she died last March, she left a small estate, a portion of which was held in a well-diversified IRA.

Because of the rules that govern inherited IRAs, we kids had the choice of paying taxes on all the money at once or paying taxes on small annual distributions spread out over our lifetimes. For me, the choice was simple—leave the nest egg to grow.

It was also simple to choose a beneficiary.

Mom struggled to make ends meet nearly all her life. When she was recovering from knee surgery, we survived on disability insurance, the school hot lunch program, and help from relatives. When she couldn’t afford a car, we walked. When outsized bills came due, Mom made draperies. Her second shift happened in the dining room, at night and on weekends, on the portable sewing machine she’d given me for Christmas.

Who helps people like Mom? Who connects the down-and-out to basic services like food pantries and infant health care? Who saves struggling families hundreds or thousands of dollars through the Earned Income Tax Credit? Who provides supportive, one-stop centers where people get credit counseling, improve job skills, and build assets?  United Way Bay Area.

Mom sent a son and two daughters to college, bought a house in late middle age, and avoided being a financial drain on her children in retirement. That last thing was important to her—in fact, it was far more important to her than it was to us.

Naming United Way Bay Area the beneficiary of the inherited IRA is how I help my mother give back. Now that she’s finished worrying about the catastrophes that tomorrow might bring, I think she’d be pleased to share her little bit of wealth. One thing of which I am sure: She’d be tickled to hear that whatever portion of the IRA I don’t spend in my lifetime will pass tax-free to UWBA directly.

Whether you are making estate plans for the first time or re-evaluating past plans, I hope you’ll join me, Kenneth Edlin, Peter Noon, Barbara Joan Deepe, and Mom. Together, we guarantee that United Way Bay Area will always be here to help.

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For more information on including UWBA in your legacy, please contact Neil Muller (nmuller@uwba.org). He’s looking forward to hearing from you, as am I.  From simple bequests to sophisticated charitable annuities, we’ve got it covered.

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