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Retirement Plan Assets

Gifts of Retirement Plan Assets

Leaving a portion of your retirement plan assets to First UU can help get the most value from your estate and protect your heirs from taxes. The reason is that retirement plan assets are subject to income taxes when paid out to a taxable entity (i.e., most people, even your spouse or children), even when the estate is too small to owe estate taxes. This can reduce the amount that is ultimately received by your heirs by up to 35 percent. In contrast, nonprofit organizations such as First Church are eligible to receive the full amount at your death without any federal taxes. Income taxes can be avoided or reduced through a carefully planned charitable gift.

There are three main approaches:

  • Designate First Church as a primary beneficiary for a percentage (1 to 100 percent) of your retirement plan assets.
  • Designate a specific amount to be paid to us before the remainder is directed to family or other individuals.
  • Make us the contingent beneficiary to receive the balance only if a loved one, as primary beneficiary, doesn't survive you.

To implement your wishes, please advise your plan administrator of your decision and sign whatever forms are required to implement your wishes.

You can also consider creating a charitable remainder trust for heavily taxed retirement plan assets. Such a trust could be set up to receive the proceeds of your retirement plan at your death. The trust would pay income for life to a family member of your choosing, after which the remaining assets pass to us. These same considerations apply to a deferred-annuity account that has not yet been annuitized (converted into regular monthly payments). Please see our Charitable Trusts page to learn more.

Questions? Need help?

Please contact First Church Development Manager Pam Bates at (619) 398-4442 or online.