Retirement and Pension Plans

Retirement account assets, if left to anyone other than a spouse, may be subject to very high taxation. However, by designating the National Gallery as recipient of any benefits remaining in a retirement plan, donors may effectively reduce the taxes on those assets.

Generally, the undistributed balance of a qualified retirement plan is taxed as part of an individual’s gross estate for estate tax purposes. Because the funds in a retirement account usually represent deferred compensation that has not yet been subject to income tax, leaving retirement funds to individual heirs other than a spouse also exposes the funds to income taxes. Retirement dollars can be depleted by this double action.

There are several ways to make a charitable gift using retirement plan assets:

• A donor can specify that his or her retirement funds pass directly to the National Gallery of Art as the primary beneficiary
• Retirement assets can be transferred to a deferred giving arrangement (e.g., trust) that will pay an income for life to family members or other persons of the donor’s choosing, after which the remaining assets pass to the Gallery
• A donor can set up a deferred gift designed to pay a life income to himself or herself

We invite you to contact us with questions or comments about planned giving; we would welcome the opportunity to discuss these options further with you. We highly recommend that you also speak to a financial adviser.