Retirement Plan Beneficiary Designations

Tax-deferred retirement plan assets are great sources of retirement income but are not always a good choice for making gifts to children and grandchildren. Consider using retirement plan assets to endow a scholarship or professorship that will advance the mission of Division of Physical Therapy forever.

And, because of the tax treatment of retirement plan assets, the "cost" of the gift to your estate and heirs is often relatively small. Click here to compare the benefits of making a retirement plan designation to other estate and life income gifts.

Retirement plan assets include assets held in Individual Retirement Accounts (IRAs) and assets held in accounts under 401(k) Plans, Profit Sharing Plans, Keogh Plans and 403(b) Annuity Plans. Income taxes on retirement plan assets are deferred but not avoided. Retirement plan assets owned at death in a taxable estate are subject to estate tax at federal tax rates. What’s more, upon receipt of the retirement plan assets by an heir, distributions are subject to federal income tax in addition to applicable state income taxes.

As a result, the combined taxes on retirement plan assets can exceed 65 percent of the total value of a retirement account.

Retirement plan assets left to Carolina qualify for the unlimited estate tax charitable deduction, and they are not subject to income tax when received by Carolina. As a result, the retirement plan assets are available in their entirety to support the Division of Physical Therapy. The bottom line is that for each $100,000 in retirement plan assets you leave to Carolina, the effective after-tax “cost” to your estate and heirs could be $35,000 or less.


Naming the Division of Physical Therapy as a beneficiary of one or more of your retirement plan accounts is one of the easiest ways to make a planned gift. Simply call your plan administrator and request a Change of Beneficiary form. In the beneficiary section, list "The Medical Foundation of North Carolina, Inc. for the benefit of the UNC Chapel Hill Division of Physical Therapy" as the primary beneficiary for all or a portion of the account. Then return the form to your plan administrator and send a copy to Rick Segal, Professor and Program Director, Division of Physical Therapy, University of North Carolina at Chapel Hill, CB # 7135, Bondurant Hall Suite 4100, Chapel Hill, NC 27599-7135 so that we can properly acknowledge your gift.