The Simple Retirement Planning Hack that’ll Save You Thousands


Demystifying Inheritance Taxes

Up to 40% of the wealth you pass to your heirs above the tax-free mark will go to the government — unless you implement this little-known retirement planning hack.

When I began this work in 1980, the amount that Americans could pass tax-free to the next generation was $161,000. Everything above that amount was taxed at the federal level to as much as 70% percent! Yikes!

Thank goodness those days are distant memories.

Today, each of us can pass more than $5 million to the next generation tax-free — (nearly $11 million for married couples) if you know this often overlooked planning step.

In truth, there are very few people that will be faced with the inheritance tax, estate tax or what’s otherwise known as the death tax.

However, the tax that does affect most everyone — including you — is the IRD (Income in Respect to a Decedent) tax.

In short, this tax involves the normal tax on a person’s IRA, 401(k) or 403(b).

These accounts require taxes to be paid because the individual did not pay the tax prior to putting money into these accounts while they were working.

The benefit was that you could have lower taxes now and then those taxes would be paid later when in retirement. The IRD tax is typically applied when a person dies prematurely or submitted a substantial amount in the IRA, 401(k) or 403(b).

And it doesn’t matter whether you’ve got $10,000 or $2 million in this type of retirement plan, you’ll be paying a heavy income tax rate on that money.

In some cases, up to 40 cents on the dollar.

There are several solutions to this tax situation. But here’s the simple hack that could save you thousands.

Simply, change the successor beneficiary on your IRA, 401(k) and 403(b) accounts to a charity.

When you die, you can give an unlimited amount of money to your spouse tax-free.

However, unless you change the designation, you will still pay the IRD tax rate on every dollar you tucked away for retirement.

So, what do you do once your spouse inherits these accounts, tax-free?

Then, change the beneficiary on your spouse’s accounts to a charity.

This type of account does not go to the living trust or to your children — only to the charity or charities you’ve designated.

If your spouse and you do not do this, the tax bill could be up to 40 cents per dollar. That means on a $1 million 401(k) account, the tax bill could be $400,000!

In changing the beneficiary to a charity, you eliminate the IRD or income tax bill and create possibly the largest gift in your lifetime.

Have you disinherited your children? No.

In fact, everything else is tax-free to your heirs: life insurance, investment property, investment portfolio, etc.

All will pass to your heirs tax-free through your estate — that is unless your estate has exceeded that $5,490,000 limit.

For most families, this enables your children to receive a clear majority of your estate tax-free…

…AND your selected charities will receive a generous gift…

…AND you’ve eliminated the most overlooked tax in America.

To save you and your heirs thousands of dollars in death-related taxes, we offer a service helping donors like you explore ideas on maximizing your tax savings potential through giving.

No cost. No obligation.

If you want to see how you can minimize your tax liability by giving to charity, let’s talk!