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Hidden Double Tax
<!-- Alternate content for non-supporting browsers --> <B>What Is It?</b> <ul> Hidden double tax refers to the tax liability due on tax-deferred benefits at the time of death. Both income tax and estate tax may become requirements. Your tax-deferred benefits could be taxed at rates that could total between 15% and 70%. </ul> <b>How Does It Happen?</b> <ul> Almost everyone today has some form of tax-deferred retirement program because of tax advantages these programs provide. Retirement money is often a combination of employer-provided pension profit sharing plans, and personal IRA's, KEOGH's, annuities, etc. <br><br> The problem is that "tax-deferred" means exactly that. The tax is not eliminated, it is merely delayed until the money is withdrawn during your lifetime or by your children after your death. <br><br> Any retirement funds remaining at death are included with your other assets for Federal Estate Tax purposes. Retirement fund assets are also subject to income taxes when they are received by your children. <b>For people in the highest tax brackets, the double tax can send more than 70 cents of each dollar to the Federal government!</b> State taxes may further shrink the amount received by your children to about 25 cents on the dollar. </ul> <b>How Can It Be Eliminated?</b> <ul> <b>There are two ways to eliminate the double tax</b> while assuring that retirement funds will be available for you and your spouse until death. <br><br> The most direct method is to change the final beneficiary after you and your spouse, to a specific Christian charity. This means that all funds remaining (tax-deferred assets) after the death of both spouses, will go to the charity which you have chosen. <br><br> The other way is to provide in your Will or Trust that you wish to leave a portion of your estate to Christian causes, and that the assets used for this gift should be those which have not previously been subject to income tax (known legally as "Income In Respect Of a Decedent"). <br><br> <B>Either way, all tax-deferred retirement funds remaining at death can be entirely excluded from both income and estate taxes.</b> The Will or Trust method, since it is broader in scope, has the added potential to eliminate double taxes on other assets as well. <br><br> Neither method is difficult to implement but, must be structured properly to maximize the benefits. However, due in part to a lack of publicity about the benefits of giving tax-deferred assets, many planning professionals are not fully aware of how to apply these advantages to particular estate plans. Barnabas Foundation professionals are willing to assist you and your advisors in making sure your plan eliminates the double tax. </ul> Contact Barnabas Foundation to see is you are a candidate for these substantial tax savings.
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