"My parents were immigrants and my father worked in a factory. That's why I appreciate Temple's populist mission so much. I'm not a wealthy man, but clearly Temple University enabled me to progress in my life. Therefore, I made the decision to designate Temple as a beneficiary of my retirement plan with the inspiring thought of providing for future generations." Professor George Edberg, EDU '49

Alumni/ae and friends of Temple are often surprised to learn that they can use their retirement plans to make a gift to the University. The easiest way is to designate Temple as a contingent beneficiary of your qualified retirement plan or IRA assuming there is anything left in the plan after you and/or your spouse have passed away.

Double Taxation
When you withdraw funds during your lifetime, income taxes must be paid. At death, any amounts remaining in the plans are potentially subject to two taxes: income and estate taxes. Your capital can be eroded by federal estate taxes of up to 45 percent, and, after the estate tax is paid, the balance is subject to income taxes of up to almost 40 percent (and perhaps higher). State income and inheritance taxes can add to the burden.

You can avoid the estate tax (but not the income tax) by naming your surviving spouse as the beneficiary, but any balance remaining in the plan at his or her death will be subject to both taxes. When your heirs receive the funds that are left over after estate taxes are paid, they must then pay income taxes, which have never been levied during your lifetime. If you try to pass these funds on to your grandchildren, you may be subject to the 55 percent generation-skipping transfer tax. The effect of these taxes with respect to your retirement plan can be devastating.

How can you reduce or eliminate the taxes imposed on the "income in respect of a decedent" (IRD) in your estate?

There are three options which you should consider:

1. Designate Temple as the Contingent Beneficiary of Your Plan
If your children are beneficiaries of what is left in your retirement account, it is subject to both estate and income taxes. When Temple is the beneficiary, the account escapes both estate and income taxes.

2. Include Your Children
Another alternative is to arrange to have the remaining balance of unconsumed IRAs and qualified pension plans paid at your death to a Temple-managed charitable remainder trust for your children. At your death (or the death of your surviving spouse), the balance of your retirement accounts is paid directly to this trust at Temple. The trust will pay your children a pre-established income for life and the remainder to Temple upon their deaths.

The advantage of this strategy is that the transfer to your Temple charitable remainder trust avoids the income tax and some of the estate tax usually attributable to your IRA or other qualified plan. Your estate receives a charitable estate tax deduction for the value of the remainder interest to Temple, based on the ages of your children at the time of your death.

By funding a testamentary charitable remainder trust with your IRA or other qualified plan, you avoid a major part of the up-front taxes. More money is transferred to the trust, which increases the payments your children can receive.

3. Include Your Spouse
Instead of benefiting your children, you could use a charitable remainder trust to provide for your surviving spouse. If you leave the balance remaining in your retirement plan to your spouse, it will escape estate taxes because of the unlimited marital deduction, but will be subject to income tax. However, if you name a charitable remainder trust as the beneficiary of your retirement plan, the proceeds will not be subject to income tax. Temple can provide an income stream to your spouse for his or her life. Upon the death of the spouse, the trust principal will be released to Temple for the program or endowed fund that you designated.

With your permission, Temple will recognize your gift through membership in the University's Acres of Diamonds Circle, a distinctive group of fellow alumni/ae and friends who have made a planned gift to the University.

If you would like to learn more about how to name Temple as a beneficiary of your IRA or other qualified retirement plan, or would consider a charitable remainder trust arrangement, please contact Jerry Rohrbach, Director of Planned Giving, at 215-204-5741 or 800-822-6957 or e-mail jerry.rohrbach@temple.edu.

---

• The Charitable Gift Annuity
• Establishing an Endowment at Temple
• Pooled Income Fund
• The Charitable Remainder Trust
• The Deferred Payment Charitable Gift Annuity
• The Charitable Lead Trust
• Bequests
• Life Insurance
• Retirement Plan
• How the Repeal of Estate Tax Will Affect You
• Request more information