Name Merrimack College as a Beneficiary of Your Retirement Plan
Support the advancement of higher education and ensure your heirs’ well-being by designating Merrimack College as a full or partial beneficiary of your IRA, 401(k), or other qualified retirement plans. The tax implications for your retirement assets may not be as you initially thought.
In fact, by donating from your retirement assets and allocating other assets to your heirs, you may be able to provide more for your heirs in the end. This approach presents a win-win situation for both your beneficiaries and the future of education at Merrimack College.
How it Works
Your financial advisor and Merrimack College gift planning professionals can help you determine whether income from a gift plan or withdrawals from your retirement account would most benefit your heirs. For more information, contact one of our gift planning experts. Here’s the process:
- You name Merrimack College as the beneficiary of a qualifying retirement plan through a beneficiary designation form, ensuring assets will not be included in your taxable estate. An extra step may be required to designate a 401(k).
- After your lifetime, the residue of your plan passes to Merrimack College tax-free and to any other named heirs.
Benefits
- Potential Tax Savings: By leaving the remainder of your retirement account to Merrimack College, you might avoid both income and estate taxes typically imposed on these assets. As Merrimack College is a non-profit educational institution, we’re exempt from income tax on the distribution, and the donation isn’t subject to estate tax. This means the full amount directly supports our mission, and your heirs may experience reduced estate tax liabilities.
- Lifetime Withdrawals: This strategy allows you to continue making withdrawals from your account throughout your lifetime, maintaining your financial flexibility.
- Beneficiary Flexibility: Should your personal circumstances change, you have the freedom to alter the beneficiary of your account at any time.
- Contribute to Future Educational Progress: Your generous contribution will help bolster Merrimack College’s ongoing efforts in providing quality higher education and fostering innovative research.
Follow These Steps to Make Sure Your Gift Is Received
- Request a beneficiary form from your bank or plan administrator. This form—not your will—determines how these assets are distributed after your lifetime.
- Write in Merrimack College as beneficiary or partial beneficiary using our business address: Merrimack College Austin Hall 315 Turnpike Street North Andover, MA 01845
- If the form requests a social security number, use our tax identification number: 04-2103731.
- Return the beneficiary form to your plan administrator. Send us a copy as well, sharing as much account information as you’re comfortable with so we can correctly identify and claim your gift (e.g., account type, account number, approximate value). Your gift will be used to support Merrimack College priorities unless you specify otherwise.
- When creating your will or trust, include a list of your non-probate assets and the beneficiaries’ contact information. Also, be sure to speak to your executor/trustee about providing copies of death certificates, which most custodians require for beneficiary claims.
More Information
Example: Assume you have $300,000 in an IRA and appreciated stock worth $250,000. You can see from this chart that your heirs actually benefit more from the lower valued gift of stock.
IRA to Charity | Stock to Heirs | IRA to Heirs |
|---|---|---|
Value of IRA | $300,000 | $250,000 |
Less Income Tax (37%)* | $0 | $110,000 |
Remainder to Charity/Heirs | $300,000 | $250,000 |
The income your heirs receive from your IRA is called “Income in Respect of a Decedent,” which is taxable upon transfer at your heirs’ highest tax rate. However, the gift of stock is taxable only when the heirs sell the shares, and only on the gain that occurred from the date of transfer—currently, the highest capital gains tax rate is 23.8%*. You may be able to give more to your heirs with less.
