Ensuring the Future of Free Speech Through Creative Planned Gifts for the First Amendment Fund at WAMC Northeast Public Radio
For most Americans, The First Amendment expresses several of our country's most essential values and represents an invaluable legacy that has come down to us from the authors of our Constitution. Therefore, when WAMC's Board of Trustees took the essential step in spring 2004 of establishing an endowment for the station, The First Amendment Fund seemed the ideal name for a resource to provide ongoing, long-term support for an organization dedicated to providing vital, timely information that can help listeners participate effectively in a democratic society.
As WAMC's endowment, The First Amendment Fund is being held, maintained, and invested so that from year to year it will yield income toward the annual operating budget. This fund, together with the indispensable and wonderfully generous annual support of our members, will help WAMC to continue its award winning special programs and thorough coverage of regional news, despite whatever vagaries in the economy and in the priorities of funding agencies the future may bring.
A Lasting Legacy for Free Speech through Creative Gift Planning
For many members and friends of WAMC, a planned gift can be an ideal way of providing a lasting legacy for free speech with a contribution to The First Amendment Fund while, at the same time, achieving substantial financial benefits and tax savings for themselves and their families. Several popular ways of giving are outlined below:
Ways of Giving
A Bequest- a gift made under your will - can be an excellent way of providing for WAMC. By including a bequest to the station in a new will, adding a codicil to your existing will, or naming WAMC as a beneficiary of your revocable trust, you can make a meaningful contribution to the station's future. WAMC's legal name and address are included in the sample language for an unrestricted bequest shown below. In case your legal adviser should ask for it, WAMC's federal tax identification number is 22-2400593.
- Unrestricted Bequest: "I give, devise and bequeath (_____ dollars/specific assets/___ percent of the residue of my estate) to WAMC, 318 Central Avenue, Albany, NY 12206, for its general purposes."
Life Income Gifts offer the benefits of an income stream as well as an income tax deduction in the year of the gift and capital gains tax savings when appreciated assets are used to fund the plan:
A Charitable Gift Annuity provides a fixed, completely predictable annuity for life backed by WAMC. The plan can be funded with cash, publicly traded securities, or a combination of the two. WAMC offers excellent rates based on the annuitants' ages.
- A Charitable Remainder Trust provides an income stream that can be structured and customized to meet the specific needs of donors and their families. The trust can be arranged to yield a fixed, completely predictable annuity, or else a variable income with potential for growth over time. In addition to cash or securities, other special assets, such as real estate or valuable tangibles, can be used to fund the plan.
A Charitable Lead Trust, which works in a manner opposite to a charitable remainder trust, enables a donor to direct income to WAMC for a term of years and then distribute the principal to heirs with substantial gift or estate tax savings. Income producing assets that are also appreciating in value can be especially effective for funding a charitable lead trust, since growth in the value of the assets during the term of the trust escapes the gift or estate taxes completely.
Real Estate - a home, vacation property, condominium, undeveloped land - can be used to provide for WAMC in several creative ways, including plans that offer lifetime benefits for the donors and/or their loved ones. A gift of real estate may also enable you to avoid significant tax liability.
RETIREMENT PLANS – PROVIDE FOR YOURSELF, YOUR FAMILY, AND WAMC RATHER THAN THE IRS
Positive Tax Consequences of Supporting WAMC with IRA or Retirement Plan Funds
Over the years as you have saved for your retirement, you may have built up a larger amount in an IRA, 401K or other qualified retirement plan than is needed to provide for your own comfort and security and that of your family. In such a situation, those retirement plan funds can be used creatively to support WAMC.
- If you are age 70 ½ or older during 2020, you can roll over as much as $100,000 in charitable gifts from an IRA directly to tax-exempt organizations such as WAMC without incurring income tax on the withdrawal. Please see below for further details on this special “window of opportunity.”
- If you name WAMC in your estate plan as eventual beneficiary of funds remaining in the retirement plan, this gift avoids both estate and income taxes.
Using Retirement Plan Funds to Benefit Your Children and WAMC
Because retirement plan funds left to one’s children are subject to the estate tax and are taxed as income to the children, bequeathing these funds to family as a lump sum can have negative tax consequences. In the past, parents could place the IRA assets in trust to further “Stretch” the distribution period of the IRA over their lifetime to maximize tax deferral. However, with the passage of the SECURE Act in 2019, most distributions to beneficiaries must be distributed within 10 years of death*.
It is important to note that there’s an alternative that enables parents to use retirement funds to provide lifetime income to their children and, at the same time, a future gift for WAMC. Parents can direct that the retirement plan funds be placed in a Charitable Remainder Trust, which can provide income to the children for life and subsequently a gift of the remaining principal to WAMC.
An important advantage of this plan is that no income tax is due when the remaining retirement plan funds “roll over” into the Charitable Remainder Trust. In addition, the parents’ estate receives a charitable estate tax deduction on a portion of the funds that represents the present value of the future gift for WAMC. The size of this deductible portion will vary according to the children’s ages at the parents’ demise and the rate of income that the trust will pay.
Now That You’ve Reached Age 72 . . .
A major change via the SECURE Act, when a person reaches the age of 72 (up from 70 ½ under previous rules), annual withdrawals from an IRA or retirement plan become mandatory. If these funds are not needed to meet your immediate needs, you could consider the following ways of benefiting WAMC:
- An outright gift from an IRA. As noted above, in 2020, you can roll over as much as $100,000 in outright charitable gifts directly to tax-exempt organizations such as WAMC without incurring income tax on the withdrawal from the IRA.
- This withdrawal can count toward the donor’s minimum distribution requirement
- This provision can be especially advantageous for donors already making charitable gifts at their 50% deduction limit
- It may also be most helpful if additional income would cause more of a donor’s Social Security income to be taxed or impact Medicare Part B premiums (both are impacted by income levels).
It is essential to note 1) that in order for the withdrawal to be tax-free,
the donor must instruct the IRA manager to transfer the assets directly
to the charity, and 2) since no income tax is paid on the money
withdrawn, no charitable income tax deduction is available for the gift.
In addition, it would be wise to check with your legal and financial
advisors to see whether or not an IRA rollover might be includable as
income for state and local taxes.
- An outright gift from an employer-sponsored retirement plan. The special “window of opportunity” for tax-free withdrawals to charity applies only to IRAs and not to any of the employer-sponsored retirement plans. However, outright gifts to WAMC and other charities from plans such as a 401(k) result in a charitable deduction that may completely offset the income tax due on withdrawing the funds from the plan.
- A gift plan that provides lifetime income to you and future gift to WAMC. Although you cannot make tax-free withdrawals from any of the retirement plans to fund life income gifts, you could achieve the following results through either one or more Charitable Gift Annuities or a Charitable Remainder Unitrust that could accept successive gifts:
- A dependable income stream for the rest of your life,
- A charitable income tax deduction for each gift that would offset a portion of the income tax due on the withdrawal. The size of each deduction would depend on your age at the time of the gift and the rate of income that you would receive.
- A generous gift for WAMC’s future.
For more information to review with your own legal and financial advisors about making gifts to WAMC from retirement plans, please contact: Amber Sickles, Membership Director, by mail at WAMC Northeast Public Radio, 318 Central Avenue, Albany, NY 12206, or by phone at (800) 323-9262, ext. 133, or by e-mail at firstname.lastname@example.org. Thank you for your concern for WAMC’s future.
*Exceptions to the 10 year distribution rule:
- Disabled beneficiaries (defined by IRC Section 72(m)(7)
- Chronically ill individuals (defined by IRC Section 7702B(c)(2)
- Individuals who are not greater than 10 years younger than the account owner
- Specific minor children of the original account owner who have not reached the age of majority (10-year rule starts upon minor child reaching age of majority)
LIFE INSURANCE – A LARGE GIFT AT LITTLE COST
Naming WAMC as Beneficiary of a Life Insurance Policy
As time passes, you may find that a Life Insurance policy once necessary for your family’s security is no longer needed because your children are now independent and other assets are providing adequate income and resources for the future. One of the simplest ways to make a large gift to WAMC is to name the station as the future beneficiary of the policy.
Members and friends of WAMC can also name the station as beneficiary of life insurance included as part of their employee benefits package that may not be needed for their family’s protection.
Alternatively, some corporations offer their officers and executives the benefit of naming a charity to receive a future gift of life insurance based on the employee’s life. This can be an easy and effective way to provide a substantial gift for WAMC’s future.
Although the value of the death benefit will be included in your estate at your death, your estate will also receive a charitable estate tax deduction equal to the policy death benefit received by the charity.
Naming WAMC as Beneficiary and Giving the Policy to the Station
In addition to naming WAMC as beneficiary, you can make an irrevocable gift of the policy to the station. You can generally deduct the lesser of your cost basis in the policy or the value of the policy at the time of the transfer. If premium payments are still due, you can make annual gifts to WAMC that are large enough to cover the premium payments. The value of those cash gifts for premium are eligible for the charitable income tax deduction in the year made.
Using Life Insurance to Replace, for Your Children’s Benefit, Assets Given to WAMC
Life insurance can be used as a replacement asset if a couple wishes to make a substantial gift to WAMC but does not want to decrease the inheritance planned for their children. A non-charitable irrevocable Insurance Trust can be used in combination with an outright gift or, most commonly, with a Charitable Remainder Trust.
At the same time the parents arrange their gift for WAMC, they also set up an Insurance Trust that takes out an insurance policy on their lives to benefit their children. To cover premium payments due, the parents can use the income tax savings and the income stream provided by the Charitable Remainder Trust. Because the Insurance Trust is the legal owner of the policy, the assets will not be included in the donors’ estate. Also, because life insurance benefits are not subject to income tax, the children receive the benefit from the policy free of all tax burdens.
For more information to review with your own legal and financial advisers about ways of supporting WAMC with a gift of life insurance, please contact Amber Sickles. Membership Director, by mail at WAMC Northeast Public Radio, 318 Central Avenue, Albany, NY 12206, or by phone at 800-323-9262, ext. 133, or by Email at email@example.com. Thank you for your concern for WAMC’s future.
*Under Code section 170(f)(11)(E) neither the donor nor the insurance agent, or insurer who issued the policy can perform this appraisal. Section B of IRS Form 8283 must be completed.
If a life insurance policy has a determined value of $5,000 or more, it will be necessary to seek a “qualified appraisal”* from someone other than the insurance company.
A gift of a life insurance policy subject to a loan may, in certain circumstances, cause significant tax problems. When considering gifting an encumbered policy seek professional tax and legal advice.
Establishing a Named Endowed Fund within The First Amendment Fund
Through gifts totaling $50,000 or more, members and friends of WAMC can establish an endowed fund within The First Amendment Fund, in their own names or the name of a loved one. Such a named fund can provide continuing support, either unrestricted toward WAMC's general operating budget or for a specified long-term need of the station, such as program development or investigative reporting. A named endowed fund can be created through outright giving, a bequest or other planned gift arrangement, or through a combination of outright and planned gifts. All friends who would like to set up a named endowed fund for a specific purpose should discuss their wishes with WAMC staff, to be certain that the use they have in mind will withstand the test of time in meeting basic needs of the station.
The First Amendment
To thank and recognize the generous friends who make commitments to The First Amendment Fund, WAMC has inaugurated The First Amendment Society. WAMC members and friends can become members of the Society through outright gifts to The First Amendment Fund totaling $5,000 or more, or a special provision in their estate plans, or a combination of outright and planned giving. If you wish, your participation can be kept completely confidential and anonymous.
Please Stay in Touch
At WAMC, we thank you for your interest in helping to ensure the station's future, and we would be pleased to welcome you into our First Amendment Society for all friends who have made special arrangements to provide long-term support.
For further information about The First Amendment Fund and The First Amendment Society, please contact us.
WAMC Northeast Public Radio
318 Central Avenue
Albany, NY 12206
Your inquiry is confidential and implies no obligation.