Retirement Plan Assets

Gifts from Tax Deferred Qualified Retirement Accounts

Many donors are interested in learning more about the ways in which their tax deferred retirement plan assets might be used to benefit people in need of decent housing in New York City. Since there are significant restrictions on how and when transfers and distributions may be made with retirement plans, anyone considering such a gift should review their situation with their retirement plan administrator, tax professional, or financial advisor.

Retirement plans such as 401(k) s, IRAs, or Keogh accounts are typically funded by an individual, by his or her employer, or both. Most retirement plans are made up of assets which are not taxed as long as the assets remain within the particular retirement plan - in other words, the plan is generally comprised of untaxed contributions and untaxed earnings. The exception to this is the Roth IRA.

While there are a variety of different types of retirement plans, typically distributions from the plan become taxable at the time when they are paid out to the beneficiary or beneficiaries. Disbursement of retirement plan funds generally occurs because the beneficiary of the plan:

  • has reached retirement.
  • has reached a certain age and is required to take distributions from the plan.
  • has become seriously ill, disabled or otherwise incapacitated.
  • has died, and the retirement plan assets must be distributed to the individual's estate or other beneficiaries named within the plan.

With the exception of one's surviving spouse, the heirs who receive distributions from another person's tax deferred plan could find themselves subject to as many as three different types of taxation:

  • income tax
  • estate tax
  • generation skipping transfer tax

The net result is that the value of the asset can be significantly reduced. However, many retirement plans permit a charity to be named as a beneficiary. Upon the death of the retirement plan participant, the interest passes to charity and is tax-free.

Naming the Urban Homesteading Assistance Board as a beneficiary of a tax deferred retirement plan is an excellent way to ensure the development and preservation of affordable housing.  It is important, however, to verify that your plan allows this provision.

Your plan administrator may require the following information:  the Urban Homesteading Assistance (U-hab), Inc. is a "public foundation," incorporated in the State of New York on November 30, 1978, and is classified as tax-exempt under Internal Revenue Code 501(c)3. The tax identification number for the Urban Homesteading Assistance Board is 13-2902798.

Before making a donation to the Urban Homesteading Assistance Board, we recommend that you consult your advisor or attorney for full advice on the effect of your gift.