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Take Full Advantage of Your Retirement Plans

Have you considered including Alpha Sigma Phi Foundation as a beneficiary of your retirement plan? Because retirement assets are heavily taxed when left to loved ones, they make an excellent charitable gift after your lifetime to tax-exempt organizations like ours. It’s easy to do – just list us on the beneficiary designation form for a percentage (0-100) of your account. Before you consider a gift of your retirement plan to us, however, you must know how to build your plan so you can live comfortably during retirement.

3 Questions to Ask Your Employer
One of the most popular forms of retirement plans is the 401(k), where employers can match a portion of your contribution. To get the most out of your company’s 401(k) plan, make sure you know the answers to these three questions:

  • How long must I be employed before making contributions to a 401(k) and receiving the company match?
  • What is the maximum salary match the company will contribute?
  • Is there a vesting schedule that applies to the company match?

Don’t Lose Out
Unfortunately, one of the biggest financial mistakes that employees make is not taking full advantage of their company’s 401(k) plan match. So to ensure that you don’t lose out on the ‘free money’ offered by your employer, make sure you contribute enough to qualify for the full company match.

 How Much You Need to Contribute for a Full Match
Employer Offering Maximum Employer Contribution Your Contribution
 50% for every dollar up to 10 % 5% 10%
Dollar for dollar up to 5% 5% 5%

Dollar for dollar for the first 3% and 50%
on the dollar for the next 4%

5%  7%

Designate a percentage of your retirement plan assets to benefit Alpha Sigma Phi after your lifetime
Do you have money saved in an employee retirement plan, IRA or tax-sheltered annuity? Each of these retirement plan assets contains income that has yet to be taxed. Your beneficiaries will owe the income tax at your death, totaling up to 39.6 percent, which may be reason enough to consider giving your loved ones less heavily taxed assets and leaving your retirement plan assets to charity instead.

Gifts of Retirement Plan Assets: Getting started
Want to get the most value from your nest egg, protect your heirs from heavy taxes and make your mark at our organization? Consider leaving a portion of your retirement plan assets to Alpha Sigma Phi Foundation.

How it works: If you die with retirement plan assets in your estate, those assets are subject to income taxes. This can reduce the amount that normally would be passed to heirs by up to 39.6 percent. In contrast, as a nonprofit organization, we are tax-exempt and eligible to receive the full amount and bypass any federal taxes. Income taxes can be eliminated or reduced through a carefully planned charitable gift. Consider these gift options:

  • Designate Alpha Sigma Phi Foundation as a primary beneficiary for a percentage (1 to 100 percent) of your retirement plan assets.
  • Designate a specific amount to be paid to us before the remainder is divided among family beneficiaries.
  • Make us the contingent beneficiary to receive the balance only if your loved one, as primary beneficiary, doesn’t survive you.

Did you know? If your children are the beneficiaries of your IRAs and other retirement plan assets, federal income taxes may erode up to 39.6 percent of the amount they receive. To implement your wishes, simply advise your plan administrator of your decision and sign whatever forms are required.

How you benefit
Leaving retirement plan assets to Alpha Sigma Phi Foundation shields your heirs from taxes on the retirement assets and frees you to give them other assets that are not as heavily taxed.

For example – Jim plans to leave $250,000 to his niece, Lisa, and $250,000 to Alpha Sigma Phi Foundation. Among his assets, Jim owns a $250,000 IRA. If he leaves the IRA to Lisa, it will be subject to income taxes at Lisa’s marginal income tax rate (35 percent). To avoid his niece having to pay these taxes, Jim names us the beneficiary of his IRA and leaves less tax-burdened assets to Lisa. Because Alpha Sigma Phi Foundation is tax-exempt, income taxes are eliminated.

Second Gift Option
You can also consider creating a charitable remainder trust for heavily taxed retirement plan assets. Such a trust could be set up to receive the proceeds of your retirement plan at your death. The trust would pay income for life to a family member of your choosing, after which the remaining assets pass to Alpha Sigma Phi Foundation.

Is this Gift Right for You?
Three yes/no questions can help you decide if a gift of retirement plan assets is right for you. If you can answer yes to each of the following questions, you may find that it makes good sense for you for you to name us as the beneficiary of your retirement plans assets. If not, we can help you find an option that’s a better fit.

  • Do you have savings in retirement plan assets, such as an employee retirement plan, IRA or tax-sheltered annuity?
  • Have you investigated the tax implications of leaving your retirement plan asset to your loved ones versus leaving them to charity?
  • Would you like to make a difference at our organization in the future?

If you think that a gift of retirement plan assets might be right for you, or if you want to talk about other options for charitable giving, please contact our President and CEO Gordy Heminger at 317-843-1911 or gheminger@alphasigmaphi.org.

How to Complete your Gift
Once you’ve considered the tax implications, you’ll see the value of leaving your retirement plan assets to us.

  • Changing Beneficiaries – If you’ve decided to shield your heirs from heavy income taxation by making a charitable donation of your retirement plan assets upon your death, simply contact your retirement plan administrator for a change of beneficiary form. Then decide what percentage you would like Alpha Sigma Phi Foundation to receive, and name us, along with the percentage, on the beneficiary form. Note that if you are married, your surviving spouse is usually entitled by law to receive the entire amount in certain qualified plans (but not IRAs). Your spouse, however, can sign a written waiver allowing the gift to us. Finally, return the form to your plan administrator, and keep a copy with your will and other estate planning documents.
  • For more information – Consulting an estate planning attorney is a smart investment that can save you and your family money and heartache in the long run. Please seek legal advice before deciding who will get what in your estate plan.

Action items
We hope our website has answered many of your questions about supporting our mission through a gift of retirement plan assets after your lifetime. Contact our President and CEO Gordy Heminger at 317-843-1811 or gheminger@alphasigmaphi.org to discuss your particular situation and to ask any questions you may have about supporting our mission with a gift of retirement plan assets after your lifetime. We’re here to help.


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