Retirement Plans

Contributions to retirement plans can provide an excellent opportunity for growth as they grow tax-free, meaning that the growth or earnings are not taxed annually but can continue to grow. The earnings are taxed when they are withdrawn, but this has allowed more dollars to be invested for more growth. Additional savings can occur if the recipient is in a lower tax bracket when the funds are withdrawn (for example, during retirement) than when the investments were growing.

However, careful planning concerning the withdrawals from retirement funds needs to be done. Not only is there a potential income tax burden, but if there is a balance in your retirement account at your death, there may be estate taxes as well. Estimates are that taxes could eat up as much as 75-80% of retirement assets under certain circumstances.

Using qualified retirement plan funds is an excellent source of assets to fund bequests. By designating Woods as a beneficiary (it can be a contingent beneficiary after the death of a spouse) funds pass to Woods Services free of taxes. It is possible to set up the beneficiary as the recipient of the entire remaining funds in the account or establish a percentage to fund the bequest.

Everyone's personal circumstances are different, so please consult your tax advisor concerning the use of qualified retirement funds.

For more information contact us at:

215.750.4216
wsfoundation@woods.org

Woods Services Foundation
P.O. Box 36
Langhorne, PA 19047

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