A Satisfying Way to Boost Retirement Income

Over the years, your investments have grown nicely, but your retirement income is inadequate. If you sell and reinvest in higher-yielding securities, you'll lose part of your gain to taxes. Does this sound like you or someone you know?

One way to solve this tax dilemma is to consider a life income plan called a charitable remainder trust. As the name implies, the principal remaining after your lifetime of receiving income from the trust will be paid to your favorite charitable organizations. You can also arrange a life income for a survivor.

No Tax on Capital Gains

In most cases, there is no tax when appreciated securities are transferred to a charitable remainder trust. If the securities are sold by the trust, the gains aren't taxed to the trust, either.

In return for your future gift to us, you could get an income much greater than the current dividend from the typical growth stock.

Example: Jean, aged 70, owns several stocks with a market value of $100,000, but they currently yield only 2 percent, or $2,000. Jean decides to transfer these securities to a charitable remainder annuity trust that will pay her $6,000 a year.

If Jean sold her stocks instead, she would pay tax on her capital gain. Their cost basis is $30,000, compared to a market value of $100,000, resulting in a gain of $70,000. At a federal capital gains tax rate of 15 percent, the tax would be $10,500.

More Tax Savings

By funding the trust with appreciated securities held long-term, you are entitled to a sizable income tax charitable deduction based on their full fair market value.

Example: Upon establishing her charitable remainder trust, Jean is entitled to an immediate charitable deduction for a portion of the current value of the trust assets. This is based on the charitable organization's right to receive the remainder of the trust assets after her lifetime, as actuarially determined by U.S. Treasury tables. Jean's deduction is $42,600 (assuming quarterly payments and a 4.6 percent federal charitable midterm rate). In her 28 percent federal tax bracket, Jean will realize income tax savings totaling $11,928.

A Gift That Gives Back

A charitable remainder trust can boost your income, save income taxes and let you profit from appreciated assets during your retirement years. Most important of all, you gain the heartwarming satisfaction of helping others in the future.

Please contact Mary Ludwig, Development Director at 712-732-5127, for more information.

The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

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