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ROLLING OVER QUALIFIED PLAN
INTO A CHARITABLE REMAINDER TRUST
A Comparison Study |
Assumptions
Adjusted gross income
Qualified plan value of
An income tax rate of
Annual payout of
Annualized earnings of
Joint Life Expectancy (Yrs.) |
$ 200,000
1,000,000
35%
8%
10%
25 |
|
Income Tax Consequences
Lump sum distribution amount
Less: Income taxes
Plus: Taxes saved - charitable deduction over 5 yrs.
Equals: Amount contributed to CRT |
Hold Strategy |
Rollover Strategy
$ 1,000,000
350,000
117,900
$ 767,900 |
Projected Cash Flow
Life income after tax
Less: Wealth Replacement Deposit
Equals: Net Cash Flow |
$1,625,000
0
$1,625,000 |
$ 1,332,700
200,000
$ 1,132,700 |
Amount to Heirs and Charity
Amount subject to IRD taxes
Less: IRD taxes @ 80%
Plus: Wealth Replacement Trust
Equals: Net Estate to heirs
Increase to Heirs
Amount to Charity |
$ 1,600,000
1,280,000
0
$ 320,000
$ 0 |
$ 0
0
1,000,000
$ 1,000,000
$ 680,000
$1,228,700 |
Note:
This Comparison Study is for planning purposes only. Each individual case will be different and actual results will vary. This study will give you a good idea as to the comparative magnitude of the cash flows and oilier benefits for you, your family and your favorite charities.
excerpted from "Passing on More Assets to Heirs" by Paul W. Gillis Jr.
© 1993 Fund Raising Management magazine |
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