Archive for May, 2007

Our excavator has completed the culvert and detention pond, and is ready to go on house lot #1.

Please pray as plans for the water system are to be completed by Friday, June 8th. 

Every year Americans contribute to IRAs, 401k plans, and other retirement plans, building resources that help them secure a comfortable retirement.  And, thanks to careful, diligent saving, many families are waking up to an attractive nest egg in their retirement years.

Statistics indicate that most people take only minimum withdrawals from their IRAs for a number of years after age 70 1/2.  As a result, many retirement fund balances do not diminish until retirees are well into their eighties, if at all.  This means that retirement accounts are often a substantial portion of the estate at death.

The most common way retirement funds are transferred is by naming a child as the beneficiary of the retirement plan.  And while this seems on the surface to provide children with a nice inheritance, transferring retirement funds in this manner can result in the highest levels of taxation, dramatically shrinking the actual amount realized by family.

For example, a $1 million dollar IRA could be subject to federal estate tax, state inheritance tax, and federal and state income tax.  The net result of this taxation can easily approach 60% . . . leaving only 40% for the children . . . or $400,000 of the original $1 million plan.

Retirement accounts are excellent tools for amassing funds, but make poor inheritance plans.  However, there is good news.  Some careful planning can result in minimum tax and maximum returns. 

This report discusses the pitfalls that both IRA owners and beneficiaries can fall into, and the techniques to avoid them.  Please note – the planning techniques described in this report are not all applicable to Roth IRAs.  Consult your tax or legal advisor for advice regarding your specific situation.

A Typical Estate

Let’s take a look at the Estate of Mary Smith.  Mary has a typical estate of $500,000 which includes a $50,000 IRA.  Mary has been a faithful supporter of a charity and desires to leave a tenth of the estate to that charity.  

The typical plan is to allow the children to receive the IRA under the IRA beneficiary designation and to transfer $50,000 by will from the remaining assets to the charity.  Since the estate assets generally include a home, perhaps stocks and bonds, cash and CDs and land, the assets given to charity would come from the type of assets that could be given to family with no income taxation to the family.  That is, assets that enjoy a “step-up” in basis. 
However, IRAs do not receive a “stepped-up” basis.  The recipient will pay income tax on the entire amount of IRA assets when they are distributed.  The chart illustrates that the IRA passed to the children has shrunk by $15,000, or 30%.  Larger estates that exceed estate tax limits will experience more significant tax impact.  The important point to keep in mind from this simple illustration is that even the smallest estates will experience a tax impact if the distribution of retirement assets is not handled carefully.

Continue for “A Better Solution”….  (more…)

If you wish to remember Village Missions in your will, here is some suggested wording that you can share with your attorney:

“I hereby bequeath to Village Missions, an Oregon nonprofit corporation, with a tax identification number of 43-6043847, (insert percentage of estate or dollar amount) to be used for (insert name of ministry project) or for general purposes as determined by the board of directors.”

Our full legal name and current contact information is:
 

Village Missions
PO Box 197
696 E Ellendale Ave
Dallas, OR  97338
(503)623-4107
Toll Free (800) 617-9905
www.Village-Missions.Org 

We are a 501(c)(3) nonprofit charitable organization incorporated in the state of Oregon.
  Our IRS Tax Identification Number is 43-6043847.
 Contact us to receive your free Guide to Planning Your Will and Trust which will help you collect and organize the information you will need to furnish the attorney making your will. This workbook will greatly speed the process and save you attorney fees.
 

Village Missionaries from Maine and New Hampshire took an opportunity to walk the property during a recent fellowship day.

Are you over age 70 and 1/2 and need to take withdrawals from your IRA?

Are you concerned about your increasing income tax?

Contribute directly from your IRA and save tax with the IRA Charitable Rollover.

When you give through an IRA Charitable Rollover, the amount given to charity is not included in taxable income. 

Donors who give any amount can benefit:

• Tax on Social Security benefits is minimized by keeping IRA distributions out of taxable income;
• Donors who are no longer able to itemize deductions enjoy a reduction in taxable income;
• Donors who give large gifts can keep their tax return simple by keeping their taxable income lower
• Donors who want to give above the 50% deduction level can do so without a carryforward limitation.

How to Do It:
Contact your IRA custodian and tell them you want to make a “qualified charitable distribution” to your favorite charity.   The amount transferred will not need to be reported as income, and you will not have to itemize to take the deduction.

You’ll be served well and the Kingdom will benefit through simplicity and convenience of the IRA Charitable Rollover.

Village Missions is a 501c3 qualified exempt public charity;

Our Federal Tax ID # is 43-6043847.

This information is provided with the understanding that Village Missions is not engaged in rendering legal, tax or other professional services. If legal advice or other expert advice is required, the services of a competent professional should be sought.

Here’s a photo of a few key members of our planning team.  Right to left are our engineer, Steve Roberge, Village Missionary Dan Michaud, and Village Missionary Lois Grindle.  Retired missionaries Bob and Lois Grindle will be moving into the first house, scheduled to be completed in July.

Village Missions Drive is now on the map in New Gloucester, Maine.

On Thursday, April 26, our excavator, Bruce Traford, moved in heavy equipment and began work on what is to become “Village Missions Drive” in New Gloucester, Maine.  This development is an answer to much prayer, and several years of planning.

The Village Missions Retirement Community  will have eight small 2 bedroom homes.  Retired missionaries will be able to rent a home at an affordable price. 

Village Missionaries serving in the east have long hoped for affordable retirement housing.  These faithful servants have willingly labored in churches that have not been able to provide for their financial well-being.  We praise the Lord for His provision.