Giving Your IRA to Loved Ones? Think Carefully

While IRAs are excellent vehicles for accumulating assets for your use during retirement, much to many people’s surprise, they are a far less attractive way to pass an inheritance to loved ones. Here’s why.

The Tax Consequences of IRAs

When you name anyone other than your spouse as beneficiary of your IRA, it will be exposed to heavy taxation, leaving less for your heirs than you had hoped. Upon your death, the income tax bill can take as much as 39.6 percent, and that percentage can be even higher if your estate is subject to estate taxes.

A Charitable Solution

If you’ve thought about contributing to California State University, Los Angeles, consider giving IRA assets to us and giving other assets that are not as heavily taxed to family members. As a nonprofit organization, we are tax-exempt, so we can use 100 percent of your IRA contribution. To get this process started:

1. Decide what percentage (1–100) you would like us to receive.
2. Contact your IRA administrator for a change-of-beneficiary form.
3. Name Cal State LA and the gift percentage on the form.
4. Return the form to your IRA administrator.
5. Let us know about your plans so we can thank you. (We will also honor your preference for anonymity).

If you have any questions about providing support to Cal State LA through your IRA, please contact Jacqueline M. Williams at (323) 343-3075 or jwilliams@calstatela.edu.