If your IRA or retirement account is a significant part of your estate, it’s important to understand how the SECURE Act and tax laws impact your heirs, and which charitable strategies can help protect your them from unnecessary tax burdens while supporting the causes you care about.

The Power of IRA Beneficiary Designations

One of the simplest ways to leave a tax-efficient legacy is by naming beneficiaries on your IRA or retirement accounts. Unlike other assets that pass-through probate, IRAs transfer directly to named beneficiaries, avoiding delays.

However, not all beneficiaries receive equal tax treatment. Since the passage of the SECURE Act, many heirs now face a 10-year payout rule that can significantly increase their tax burden.

The SECURE Act and How It Affects Inherited IRAs

Before the SECURE Act, an heir who inherited an IRA could take Required Minimum Distributions (RMDs) over their lifetime, spreading out taxable withdrawals and reducing their annual tax liability.

Now, the SECURE Act requires most non-spouse beneficiaries to withdraw the full balance of the inherited IRA within 10 years of the account holder’s passing.

Why Is This a Problem?

1. Larger Tax Burdens for Heirs – Instead of spreading distributions over decades, heirs must now withdraw (and pay taxes on) the entire IRA within 10 years. If the inheritance pushes them into a higher tax bracket, they could pay significantly more in taxes.
2. Less Control Over the Timing of Withdrawals – Heirs can no longer stretch withdrawals over their lifetime to minimize taxable income.
3. Reduced Wealth Transfer Efficiency – More of the IRA is lost to taxes instead of benefiting your heirs or charitable causes.

This change has many high-net-worth individuals rethinking their estate plans—and for good reason.

Why Designating a Charity as an IRA Beneficiary Makes Sense

Another highly effective legacy strategy is to leave IRA assets to charity while leaving other assets (such as real estate or taxable brokerage accounts) to family

Why? Because charities don’t pay income taxes.

• If heirs inherit an IRA, they must pay ordinary income tax on distributions.
• If a charity inherits the IRA, 100% of the funds can be used for its mission tax-free.
• Heirs can inherit other step-up-in-basis assets (like stocks or real estate), which can be passed down with minimal tax consequences.

We often find that donors want to support multiple charities through their IRA. This can be done easily through a Donor Advised Fund, which is well-equipped to support multiple charities. 

Smart planning can help ensure that the wealth you worked hard to build is used efficiently—whether supporting family, charity, or both.

Leaving a Legacy That Lasts

Estate planning is not just about passing down wealth—it’s about aligning your values with your financial legacy. The right IRA beneficiary designations and charitable giving strategies can:

✅ Reduce taxes on your estate
✅ Maximize what your heirs receive
✅ Create an enduring charitable impact

With proper planning, your legacy can extend far beyond your lifetime, ensuring that both your family and the causes you care about continue to thrive.

Get Started on Your Legacy Plan Today

At Truman Heartland Community Foundation, we help donors create customized charitable giving strategies that maximize tax benefits while making a lasting difference. Whether you’re considering a Donor-Advised Fund or a direct IRA beneficiary designation, we can help guide you through the best options.

📞 Contact Cole Eason today at 816.912.4182 or eason@thcf.org to start planning your legacy.

Your giving can be smart, strategic, and impactful—for your family and your community.