split fifty-fifty between the Collegeof Agriculture and Life Sciences(from which her husband Ronald,’61 farm operations, graduated) andthe 4-H Foundation.

Retirement accounts likeSwanson’s often are exposed toincome tax and estate taxes thatmay be avoided or reduced throughsound planning. By naming the 4-HFoundation and ISU Foundation asbeneficiaries of her retirementaccount, Swanson will provide animportant gift and benefit from sig-nificant tax savings.

The meaningful gift to the 4-HFoundation is important because 4-His in her blood. Swanson joined 4-Has a 10-year-old and remained activethrough her freshman year in col-lege. After graduating from IowaState (’64 home economics educa-tion), marrying Ronald and movingto a farm north of Webster City, 4-Hcame calling again. “Two younggirls came to our door and wantedto know if I would be their 4-Hleader,” Swanson recalled. “I hadgotten so much out of 4-H while Iwas a youth I wanted to give back. I

Christian Petersen’s sculpture, “ThePrice of Victory,” has always held aspecial spot in Florine Swanson’sheart. The sculpture of a dyingWorld War II solider reminded herof her father, himself a veteran ofthat war who lost a hand in combat.The disability payments from thatinjury eventually helped paySwanson’s tuition, room and boardat Iowa State University.

“The sculpture looked so muchlike my father,” she said. “I was verytaken by that.” So taken that sheattempted to persuade her motherto help fund the restoration of thesculpture. The attempt was unsuc-cessful.

When her mother died, Swansonlearned that her mother’s thoughtfuland frugal efforts had resulted in anunexpected inheritance forSwanson. “After she died I thoughtI could use part of the inheritance Ireceived to do something that I hadwanted her to do while she wasalive,” Swanson said.

So, in memory of her parents,Swanson gave some of that inheri-tance to University Museums torestore the Petersen sculpture.

While that wasn’t the first giftSwanson made to Iowa State, at thetime it was the largest gift she hadmade. Since then, the self-described“middle class” woman has contin-ued to support Iowa State in a num-ber of areas. She has also planned agift to come via her retirementassets from her days as executivedirector of the 4-H Foundation oncampus. The deferred gift will be

IOWASTATEUNIVERSITYFOUNDATION

2505 UNIVERSITYBOULEVARD

P.O.BOX2230AMES, IA 50010-2230

OFFICE OF GIFT PLANNING

2505 UNIVERSITY BOULEVARD

P. O. BOX 2230AMES, IA 50010-2230

How to Learn More about Planningwith Retirement AssetsWe’ve prepared a brochure whichanswers many questions about the charitable use of retirement plan assets.It’s called Retirement Plan Assets —Leaving More to Your Family andCharity. You can receive a complimentarycopy simply by returning the attachedcard.

The tax ramifications of retirementplan distributions are extremely complexand action should not be undertakenwithout consulting your own profession-al tax advisors. We will be happy to helpyou explore how you can reduce taxesand leave more to your heirs and favoritecharities with careful planning. It couldbe a very wise investment of your time.

INSIGHTSIOWA STATE UNIVERSITY FOUNDATION

A CHARITABLE PLANNING GUIDE FOR ISU ALUMNI AND FRIENDS

SUMMER 2009

PHONE: 515.294.5398TOLL-FREE: 800.621.8515www.withprideandpurpose.orggiftplanning@foundation.iastate.edu

INSIDE THIS ISSUE ...

IN THIS ISSUE ...

2 Taxation of your retirementassets

4 Retirement plan beneficiaries

5 Florine Swanson: Knowingyou’ve done the right thing

Florine Swanson’s RetirementAssets Provide an Important Gift

Taxation of Your RetirementAssets

Retirement Plan Beneficiaries

Cover Photo Identification

Visit us online at www.isugift.org

never realized it wouldstart a month after I grad-uated from Iowa State.”

Swanson eventuallywas elected to the 4-HFoundation Board andthen served as the execu-tive director of the organi-zation from 1987-2005.

During Swanson’s yearswith the 4-H Foundation,the organization became

more serious about fund raising.“We were facing major improve-ments at the (4-H) camp and wewanted to provide other opportuni-ties for young people,” she said.

Swanson has participated in anumber of fund raising efforts, notonly for 4-H, but also for otherlocal, state, national and interna-tional organizations. Her personalphilanthropy became a naturalextension of fund raising efforts.

“As I look back, most of ourphilanthropy has revolved aroundchildren and women’s issues,” shesaid. “I’m not a wealthy woman,we’re very middle class, and so mybig gifts are small in comparison toothers. But I like to think that mycontributions have made adifference — whether it’s supporting4-H or a local project that makesmy community a better place tolive. I feel like we’re investing insomething, not just giving moneyaway. And when you know thatsomething you’ve done has made adifference, you get a special feeling,knowing you’ve done the rightthing.”

Retirement Assets Provide Meaningful Gift

5

Gift Planning Staff: (L-R) Gregg Hinders, Administrative Coordinator

Lynda M. Jacobson, Assistant Vice President of DevelopmentPaul Caspersen, CFP®, CMFC, Executive Director of Development

giftplanning@foundation.iastate.edu

The information in this publication is not intended as legal advice. For legal advice, pleaseconsult an attorney. Figures cited in examples are based on rates current at the time of printingand are subject to change. References to estate and income tax include federal taxes only;individual state taxes may further impact results.

Florine Swanson

The upshot is that it often makessense to — • fulfill family bequests with non-

IRD assets that do not carryincome tax burdens, and

• use IRD items, such as retirementplan assets and IRAs, to makecontributions to qualifiedcharitable organizations such asIowa State University.

Example: Bill, a widower andloyal supporter, intends to make agenerous bequest to Iowa StateUniversity in his will. The bequestwill be in the form of XYZ stock. Heplans to leave the balance of hisestate, including significant retire-ment plan accumulations, to his twoadult children. Here is the likely taximpact (in 2009) of his current planon his retirement plan assets:

Top federal estate tax bracket of his estate 45%

Top state death tax bracket of his estate 8%

Top federal income tax bracket of his heirs 35%

Top state income tax bracket of his heirs 4%

Less: federal income tax deduction for federal estate tax paid on IRD –30%*

Effective rate of combined taxes 62%

*This will depend on how large the retirement planassets are as a percentage of the estate. We havemade an assumption here for illustration.

Under Bill’s current strategy, only38 percent of his retirement plan

Iowa State University Foundation INSIGHTS

Retirement Assets in a Non-taxable EstatePlanning Still Has Important Benefits

What if you don’t anticipate that your estate will be subject to the federal estate tax?(The estate tax exemption amount is $3.5 million in 2009.) Should you still be concernedabout your retirement assets and how they might be distributed at your death?

The answer is an emphatic “yes.” It doesn’t matter how large your estate might be,retirement plan assets received by heirs are considered income in respect of a decedent(IRD), and they are subject to income tax that must be paid by your heirs. On the otherhand, if Iowa State receives the retirement plan assets, we pay no income tax — the fullamount becomes available to further our work. Thus, if you want to support us or anotherworthy philanthropic organization through your estate plan, retirement plan assets maybe an excellent option. Other assets that are not subject to federal income taxation canbe left to your children or other heirs. This helps assure that your estate assets have thegreatest possible impact on the people and organizations most important to you.

If you’re like many of our friends and supporters,you’ve worked hard, invested wisely and built a retire-ment nest egg over the years. Whether you are alreadyretired or perhaps looking forward to its arrival, finan-cial and estate planning have become more criticalthan ever with the volatility of the stock market andour ever-changing tax laws.

Much of your accumulated wealth is probably insome form of retirement plan — an employer’s pen-sion or profit-sharing plan, a Keogh plan if you areself-employed, or perhaps a salary deferral plan suchas a 401(k) or 403(b) plan. In all likelihood, you alsohave one or more traditional IRAs. All offer uniqueopportunities for growth because the amounts in suchplans generally are not subject to income taxationuntil the funds are withdrawn.

With the recent performance of the stock market,smart management of retirement plan assets is critical.On top of disappointing market results, a downside oftax-deferred accumulation of retirement plan assetscomes when you or your heirs take distributions fromyour retirement account, and taxes have to be paid onretirement wealth. For most retirement accounts,

whatever comes out is taxableincome — even if the accountvalue is substantially less than itwas some months or years ago.

In this issue of Insights, welook at the “hidden taxes” thatcan severely deplete your retire-ment accumulation. It might stunyou and your heirs to see how your thrift and wiseinvestment decisions can wind up providing less thanwhat you were counting on. You also will see howsmart gift planning can help minimize your total taxburden and, at the same time, enable you to do moreto fulfill your philanthropic objectives and help IowaState University.

Lynda M. JacobsonAssistant Vice President of Development Office of Gift Planningljacobson@foundation.iastate.edu515.294.4049 y 800.621.8515

These assets are “tax-cursed”because they are potentially subjectto both the federal estate tax andthe federal income tax.

For example, when a distributionis made from a tax-deferred retire-ment account, the government“makes up” tax-wise for letting youavoid federal income taxes on (1) contributions to the plan and(2) the investment earnings insidethe plan while the account wasbuilding. If this distribution occursafter the plan participant’s death,the federal estate tax may apply tothe decedent’s estate, as well as theincome tax on the distribution. So,the heirs are left with the unpleas-ant possibility of double taxation —or even quadruple taxation whenstate taxes are applicable.

Federal tax law allows an estatebeneficiary who has received IRD(an asset that is subject to federalincome tax) to deduct the federalestate tax paid on the IRD forincome tax purposes.Nonetheless,even with this partial tax relief, IRDitems are not as attractive to estatebeneficiaries as other types of prop-erty which carry no income tax con-sequences.

There is another important con-sideration: If the recipient of theIRD item is an income tax exemptcharitable organization, there is noincome tax liability when the IRDitem is received. In addition, theestate itself can deduct charitablebequests in computing federal andstate death taxes.

How Much Will Be Lost to Death Taxes?If a retirement plan participant hasassets remaining in the plan atdeath and bequeaths them to indi-vidual heirs (other than a survivingspouse), the remaining accumulationat death will be subject to federalestate taxation. The federal estatetax rate is 45 percent on taxableestates over $3.5 million (in 2009).

State death taxes can depleteretirement accounts even more at aparticipant’s death. Moreover, manystates have raised their death taxesin the past few years because of fiscal shortfalls and unfavorablechanges in federal laws.

Why It Pays to Know about “Income in Respect of a Decedent”From a tax point of view, someassets carry a heavier tax burdenthan others. Such is the case withthose classified as “income inrespect of a decedent.” If thissounds complicated, stay with us aswe explain income in respect of adecedent, or “IRD.” Planning withan eye on IRD can provide impor-tant tax relief.

When your life insurance bene-fits are paid to your beneficiary, oryou leave securities or real estate toan heir, such property is potentiallysubject to the federal estate tax —but not to the federal income tax.This contrasts with the treatment ofcertain assets that the law calls IRD.

Find a planning option thatbenefits you and Iowa State We hope you have found useful ideas in thisissue of Insights. To further aid your planning,send for a complimentary copy of the bookletslisted below, with no obligation. Simply fill outthis tear-off card, fold, tape it on the open end,and drop it in the mail to us. We’ll pick up thepostage.

Please send a complimentary copy of:

The Charitable Gift Annuity — Back toBasics, a brochure detailing how giftannuities work, and the benefits for adonor.

Personal Financial Affairs: Your Book ofRecords, a helpful planning guide fordocumenting important information.

I’m interested in a no-cost, no obligationillustration of the benefits of a charitablegift annuity.

I’m interested in discussing the variousways to support Iowa State. Please contact me____ by phone____ by e-mail to talk about these possibilities.

Please sign me up for your free e-newsletter. E-mail address below.

NAME

ADDRESS

CITY

STATE, ZIP

TELEPHONE

E-MAIL

INGA0509

Sound Planning Is More Critical than Ever

Visit us online at www.isugift.org

assets will be left to his children —hardly what Bill was hoping toachieve after all those years of hardwork, thrift and smart investmentchoices.

As an alternate strategy, Bill candesignate Iowa State as a beneficiaryor partial beneficiary of the retire-ment plan. The assets will not besubject to income taxes or deathtaxes to the extent they are used tosatisfy the bequest to us. What’smore, the XYZ stock, if left to thechildren, will receive a “stepped-upbasis” to its fair market value at

Taxation of Your Retirement Assets: Some Facts You Need to Know

2 43

Retirement plan assets are potential-ly exposed to a harsh, multi-pronged tax system: federal incometaxes, federal estate taxes, stateincome taxes and state death taxes.Some people who fail to carefullyplan may see these combined taxestake a substantial toll on theirretirement accumulation — hardlythe reward they expected from yearsof hard work and sacrifice. Here’s abrief overview showing how thesetaxes can affect your retirementaccount and what you can do tostop the tax erosion of your retire-ment nest egg.

How Much Will Be Lost to Income Taxes?Retirement plan distributions gener-ally are taxable as ordinary incomein the year received. Under the cur-rent federal income tax laws, themarginal tax rate on ordinaryincome can be as high as 35 percent.

If your state and/or locality leviesan income tax, the distribution mayalso be subject to these taxes, whichcould add several more percentagepoints to the income tax depletion.

Moreover, “premature” distribu-tions may trigger a 10 percentpenalty tax in addition to the regu-lar income tax. Generally, a distribu-tion is premature if taken before age591/2, unless certain exceptionsapply. A plan distribution followinga participant’s death is one of theexceptions, so the 10 percent tax isonly a factor for lifetime distribu-tions.

How to Name Iowa State as a Retirement Plan Beneficiary

The easiest way to donate retirement plan assets is to designate us as abeneficiary. At your request, the plan administrator will send you the cor-rect form to sign. If you are married, your spouse will need to waive hisor her rights to the survivor benefits from the plan (though this is not thecase for IRAs). Be sure to consult your financial and tax advisors to dis-cuss how this idea fits in with your overall planning.

Bill’s death, which may save capitalgains taxes for the children shouldthey later sell the stock. In this sce-nario, everyone comes out ahead.

Bill is like many of our friendsand supporters who want to make alasting expression of their commit-ment to our education mission. Byfunding his generous gift withretirement plan assets, he can real-ize his philanthropic dream at a farlower after-tax cost than might bepossible otherwise, and still providefor his family.

FPO

The upshot is that it often makessense to — • fulfill family bequests with non-

IRD assets that do not carryincome tax burdens, and

• use IRD items, such as retirementplan assets and IRAs, to makecontributions to qualifiedcharitable organizations such asIowa State University.

Example: Bill, a widower andloyal supporter, intends to make agenerous bequest to Iowa StateUniversity in his will. The bequestwill be in the form of XYZ stock. Heplans to leave the balance of hisestate, including significant retire-ment plan accumulations, to his twoadult children. Here is the likely taximpact (in 2009) of his current planon his retirement plan assets:

Top federal estate tax bracket of his estate 45%

Top state death tax bracket of his estate 8%

Top federal income tax bracket of his heirs 35%

Top state income tax bracket of his heirs 4%

Less: federal income tax deduction for federal estate tax paid on IRD –30%*

Effective rate of combined taxes 62%

*This will depend on how large the retirement planassets are as a percentage of the estate. We havemade an assumption here for illustration.

Under Bill’s current strategy, only38 percent of his retirement plan

Iowa State University Foundation INSIGHTS

Retirement Assets in a Non-taxable EstatePlanning Still Has Important Benefits

What if you don’t anticipate that your estate will be subject to the federal estate tax?(The estate tax exemption amount is $3.5 million in 2009.) Should you still be concernedabout your retirement assets and how they might be distributed at your death?

The answer is an emphatic “yes.” It doesn’t matter how large your estate might be,retirement plan assets received by heirs are considered income in respect of a decedent(IRD), and they are subject to income tax that must be paid by your heirs. On the otherhand, if Iowa State receives the retirement plan assets, we pay no income tax — the fullamount becomes available to further our work. Thus, if you want to support us or anotherworthy philanthropic organization through your estate plan, retirement plan assets maybe an excellent option. Other assets that are not subject to federal income taxation canbe left to your children or other heirs. This helps assure that your estate assets have thegreatest possible impact on the people and organizations most important to you.

If you’re like many of our friends and supporters,you’ve worked hard, invested wisely and built a retire-ment nest egg over the years. Whether you are alreadyretired or perhaps looking forward to its arrival, finan-cial and estate planning have become more criticalthan ever with the volatility of the stock market andour ever-changing tax laws.

Much of your accumulated wealth is probably insome form of retirement plan — an employer’s pen-sion or profit-sharing plan, a Keogh plan if you areself-employed, or perhaps a salary deferral plan suchas a 401(k) or 403(b) plan. In all likelihood, you alsohave one or more traditional IRAs. All offer uniqueopportunities for growth because the amounts in suchplans generally are not subject to income taxationuntil the funds are withdrawn.

With the recent performance of the stock market,smart management of retirement plan assets is critical.On top of disappointing market results, a downside oftax-deferred accumulation of retirement plan assetscomes when you or your heirs take distributions fromyour retirement account, and taxes have to be paid onretirement wealth. For most retirement accounts,

whatever comes out is taxableincome — even if the accountvalue is substantially less than itwas some months or years ago.

In this issue of Insights, welook at the “hidden taxes” thatcan severely deplete your retire-ment accumulation. It might stunyou and your heirs to see how your thrift and wiseinvestment decisions can wind up providing less thanwhat you were counting on. You also will see howsmart gift planning can help minimize your total taxburden and, at the same time, enable you to do moreto fulfill your philanthropic objectives and help IowaState University.

Lynda M. JacobsonAssistant Vice President of Development Office of Gift Planningljacobson@foundation.iastate.edu515.294.4049 y 800.621.8515

These assets are “tax-cursed”because they are potentially subjectto both the federal estate tax andthe federal income tax.

For example, when a distributionis made from a tax-deferred retire-ment account, the government“makes up” tax-wise for letting youavoid federal income taxes on (1) contributions to the plan and(2) the investment earnings insidethe plan while the account wasbuilding. If this distribution occursafter the plan participant’s death,the federal estate tax may apply tothe decedent’s estate, as well as theincome tax on the distribution. So,the heirs are left with the unpleas-ant possibility of double taxation —or even quadruple taxation whenstate taxes are applicable.

Federal tax law allows an estatebeneficiary who has received IRD(an asset that is subject to federalincome tax) to deduct the federalestate tax paid on the IRD forincome tax purposes.Nonetheless,even with this partial tax relief, IRDitems are not as attractive to estatebeneficiaries as other types of prop-erty which carry no income tax con-sequences.

There is another important con-sideration: If the recipient of theIRD item is an income tax exemptcharitable organization, there is noincome tax liability when the IRDitem is received. In addition, theestate itself can deduct charitablebequests in computing federal andstate death taxes.

How Much Will Be Lost to Death Taxes?If a retirement plan participant hasassets remaining in the plan atdeath and bequeaths them to indi-vidual heirs (other than a survivingspouse), the remaining accumulationat death will be subject to federalestate taxation. The federal estatetax rate is 45 percent on taxableestates over $3.5 million (in 2009).

State death taxes can depleteretirement accounts even more at aparticipant’s death. Moreover, manystates have raised their death taxesin the past few years because of fiscal shortfalls and unfavorablechanges in federal laws.

Why It Pays to Know about “Income in Respect of a Decedent”From a tax point of view, someassets carry a heavier tax burdenthan others. Such is the case withthose classified as “income inrespect of a decedent.” If thissounds complicated, stay with us aswe explain income in respect of adecedent, or “IRD.” Planning withan eye on IRD can provide impor-tant tax relief.

When your life insurance bene-fits are paid to your beneficiary, oryou leave securities or real estate toan heir, such property is potentiallysubject to the federal estate tax —but not to the federal income tax.This contrasts with the treatment ofcertain assets that the law calls IRD.

Find a planning option thatbenefits you and Iowa State We hope you have found useful ideas in thisissue of Insights. To further aid your planning,send for a complimentary copy of the bookletslisted below, with no obligation. Simply fill outthis tear-off card, fold, tape it on the open end,and drop it in the mail to us. We’ll pick up thepostage.

Please send a complimentary copy of:

The Charitable Gift Annuity — Back toBasics, a brochure detailing how giftannuities work, and the benefits for adonor.

Personal Financial Affairs: Your Book ofRecords, a helpful planning guide fordocumenting important information.

I’m interested in a no-cost, no obligationillustration of the benefits of a charitablegift annuity.

I’m interested in discussing the variousways to support Iowa State. Please contact me____ by phone____ by e-mail to talk about these possibilities.

Please sign me up for your free e-newsletter. E-mail address below.

NAME

ADDRESS

CITY

STATE, ZIP

TELEPHONE

E-MAIL

INGA0509

Sound Planning Is More Critical than Ever

Visit us online at www.isugift.org

assets will be left to his children —hardly what Bill was hoping toachieve after all those years of hardwork, thrift and smart investmentchoices.

As an alternate strategy, Bill candesignate Iowa State as a beneficiaryor partial beneficiary of the retire-ment plan. The assets will not besubject to income taxes or deathtaxes to the extent they are used tosatisfy the bequest to us. What’smore, the XYZ stock, if left to thechildren, will receive a “stepped-upbasis” to its fair market value at

Taxation of Your Retirement Assets: Some Facts You Need to Know

2 43

Retirement plan assets are potential-ly exposed to a harsh, multi-pronged tax system: federal incometaxes, federal estate taxes, stateincome taxes and state death taxes.Some people who fail to carefullyplan may see these combined taxestake a substantial toll on theirretirement accumulation — hardlythe reward they expected from yearsof hard work and sacrifice. Here’s abrief overview showing how thesetaxes can affect your retirementaccount and what you can do tostop the tax erosion of your retire-ment nest egg.

How Much Will Be Lost to Income Taxes?Retirement plan distributions gener-ally are taxable as ordinary incomein the year received. Under the cur-rent federal income tax laws, themarginal tax rate on ordinaryincome can be as high as 35 percent.

If your state and/or locality leviesan income tax, the distribution mayalso be subject to these taxes, whichcould add several more percentagepoints to the income tax depletion.

Moreover, “premature” distribu-tions may trigger a 10 percentpenalty tax in addition to the regu-lar income tax. Generally, a distribu-tion is premature if taken before age591/2, unless certain exceptionsapply. A plan distribution followinga participant’s death is one of theexceptions, so the 10 percent tax isonly a factor for lifetime distribu-tions.

How to Name Iowa State as a Retirement Plan Beneficiary

The easiest way to donate retirement plan assets is to designate us as abeneficiary. At your request, the plan administrator will send you the cor-rect form to sign. If you are married, your spouse will need to waive hisor her rights to the survivor benefits from the plan (though this is not thecase for IRAs). Be sure to consult your financial and tax advisors to dis-cuss how this idea fits in with your overall planning.

Bill’s death, which may save capitalgains taxes for the children shouldthey later sell the stock. In this sce-nario, everyone comes out ahead.

Bill is like many of our friendsand supporters who want to make alasting expression of their commit-ment to our education mission. Byfunding his generous gift withretirement plan assets, he can real-ize his philanthropic dream at a farlower after-tax cost than might bepossible otherwise, and still providefor his family.

FPO

split fifty-fifty between the Collegeof Agriculture and Life Sciences(from which her husband Ronald,’61 farm operations, graduated) andthe 4-H Foundation.

Retirement accounts likeSwanson’s often are exposed toincome tax and estate taxes thatmay be avoided or reduced throughsound planning. By naming the 4-HFoundation and ISU Foundation asbeneficiaries of her retirementaccount, Swanson will provide animportant gift and benefit from sig-nificant tax savings.

The meaningful gift to the 4-HFoundation is important because 4-His in her blood. Swanson joined 4-Has a 10-year-old and remained activethrough her freshman year in col-lege. After graduating from IowaState (’64 home economics educa-tion), marrying Ronald and movingto a farm north of Webster City, 4-Hcame calling again. “Two younggirls came to our door and wantedto know if I would be their 4-Hleader,” Swanson recalled. “I hadgotten so much out of 4-H while Iwas a youth I wanted to give back. I

Christian Petersen’s sculpture, “ThePrice of Victory,” has always held aspecial spot in Florine Swanson’sheart. The sculpture of a dyingWorld War II solider reminded herof her father, himself a veteran ofthat war who lost a hand in combat.The disability payments from thatinjury eventually helped paySwanson’s tuition, room and boardat Iowa State University.

“The sculpture looked so muchlike my father,” she said. “I was verytaken by that.” So taken that sheattempted to persuade her motherto help fund the restoration of thesculpture. The attempt was unsuc-cessful.

When her mother died, Swansonlearned that her mother’s thoughtfuland frugal efforts had resulted in anunexpected inheritance forSwanson. “After she died I thoughtI could use part of the inheritance Ireceived to do something that I hadwanted her to do while she wasalive,” Swanson said.

So, in memory of her parents,Swanson gave some of that inheri-tance to University Museums torestore the Petersen sculpture.

While that wasn’t the first giftSwanson made to Iowa State, at thetime it was the largest gift she hadmade. Since then, the self-described“middle class” woman has contin-ued to support Iowa State in a num-ber of areas. She has also planned agift to come via her retirementassets from her days as executivedirector of the 4-H Foundation oncampus. The deferred gift will be

IOWASTATEUNIVERSITYFOUNDATION

2505 UNIVERSITYBOULEVARD

P.O.BOX2230AMES, IA 50010-2230

OFFICE OF GIFT PLANNING

2505 UNIVERSITY BOULEVARD

P. O. BOX 2230AMES, IA 50010-2230

How to Learn More about Planningwith Retirement AssetsWe’ve prepared a brochure whichanswers many questions about the charitable use of retirement plan assets.It’s called Retirement Plan Assets —Leaving More to Your Family andCharity. You can receive a complimentarycopy simply by returning the attachedcard.

The tax ramifications of retirementplan distributions are extremely complexand action should not be undertakenwithout consulting your own profession-al tax advisors. We will be happy to helpyou explore how you can reduce taxesand leave more to your heirs and favoritecharities with careful planning. It couldbe a very wise investment of your time.

INSIGHTSIOWA STATE UNIVERSITY FOUNDATION

A CHARITABLE PLANNING GUIDE FOR ISU ALUMNI AND FRIENDS

SUMMER 2009

PHONE: 515.294.5398TOLL-FREE: 800.621.8515www.withprideandpurpose.orggiftplanning@foundation.iastate.edu

INSIDE THIS ISSUE ...

IN THIS ISSUE ...

2 Taxation of your retirementassets

4 Retirement plan beneficiaries

5 Florine Swanson: Knowingyou’ve done the right thing

Florine Swanson’s RetirementAssets Provide an Important Gift

Taxation of Your RetirementAssets

Retirement Plan Beneficiaries

Cover Photo Identification

Visit us online at www.isugift.org

never realized it wouldstart a month after I grad-uated from Iowa State.”

Swanson eventuallywas elected to the 4-HFoundation Board andthen served as the execu-tive director of the organi-zation from 1987-2005.

During Swanson’s yearswith the 4-H Foundation,the organization became

more serious about fund raising.“We were facing major improve-ments at the (4-H) camp and wewanted to provide other opportuni-ties for young people,” she said.

Swanson has participated in anumber of fund raising efforts, notonly for 4-H, but also for otherlocal, state, national and interna-tional organizations. Her personalphilanthropy became a naturalextension of fund raising efforts.

“As I look back, most of ourphilanthropy has revolved aroundchildren and women’s issues,” shesaid. “I’m not a wealthy woman,we’re very middle class, and so mybig gifts are small in comparison toothers. But I like to think that mycontributions have made adifference — whether it’s supporting4-H or a local project that makesmy community a better place tolive. I feel like we’re investing insomething, not just giving moneyaway. And when you know thatsomething you’ve done has made adifference, you get a special feeling,knowing you’ve done the rightthing.”

Retirement Assets Provide Meaningful Gift

5

Gift Planning Staff: (L-R) Gregg Hinders, Administrative Coordinator

Lynda M. Jacobson, Assistant Vice President of DevelopmentPaul Caspersen, CFP®, CMFC, Executive Director of Development

giftplanning@foundation.iastate.edu

The information in this publication is not intended as legal advice. For legal advice, pleaseconsult an attorney. Figures cited in examples are based on rates current at the time of printingand are subject to change. References to estate and income tax include federal taxes only;individual state taxes may further impact results.

Florine Swanson

split fifty-fifty between the Collegeof Agriculture and Life Sciences(from which her husband Ronald,’61 farm operations, graduated) andthe 4-H Foundation.

Retirement accounts likeSwanson’s often are exposed toincome tax and estate taxes thatmay be avoided or reduced throughsound planning. By naming the 4-HFoundation and ISU Foundation asbeneficiaries of her retirementaccount, Swanson will provide animportant gift and benefit from sig-nificant tax savings.

The meaningful gift to the 4-HFoundation is important because 4-His in her blood. Swanson joined 4-Has a 10-year-old and remained activethrough her freshman year in col-lege. After graduating from IowaState (’64 home economics educa-tion), marrying Ronald and movingto a farm north of Webster City, 4-Hcame calling again. “Two younggirls came to our door and wantedto know if I would be their 4-Hleader,” Swanson recalled. “I hadgotten so much out of 4-H while Iwas a youth I wanted to give back. I

Christian Petersen’s sculpture, “ThePrice of Victory,” has always held aspecial spot in Florine Swanson’sheart. The sculpture of a dyingWorld War II solider reminded herof her father, himself a veteran ofthat war who lost a hand in combat.The disability payments from thatinjury eventually helped paySwanson’s tuition, room and boardat Iowa State University.

“The sculpture looked so muchlike my father,” she said. “I was verytaken by that.” So taken that sheattempted to persuade her motherto help fund the restoration of thesculpture. The attempt was unsuc-cessful.

When her mother died, Swansonlearned that her mother’s thoughtfuland frugal efforts had resulted in anunexpected inheritance forSwanson. “After she died I thoughtI could use part of the inheritance Ireceived to do something that I hadwanted her to do while she wasalive,” Swanson said.

So, in memory of her parents,Swanson gave some of that inheri-tance to University Museums torestore the Petersen sculpture.

While that wasn’t the first giftSwanson made to Iowa State, at thetime it was the largest gift she hadmade. Since then, the self-described“middle class” woman has contin-ued to support Iowa State in a num-ber of areas. She has also planned agift to come via her retirementassets from her days as executivedirector of the 4-H Foundation oncampus. The deferred gift will be

IOWASTATEUNIVERSITYFOUNDATION

2505 UNIVERSITYBOULEVARD

P.O.BOX2230AMES, IA 50010-2230

OFFICE OF GIFT PLANNING

2505 UNIVERSITY BOULEVARD

P. O. BOX 2230AMES, IA 50010-2230

How to Learn More about Planningwith Retirement AssetsWe’ve prepared a brochure whichanswers many questions about the charitable use of retirement plan assets.It’s called Retirement Plan Assets —Leaving More to Your Family andCharity. You can receive a complimentarycopy simply by returning the attachedcard.

The tax ramifications of retirementplan distributions are extremely complexand action should not be undertakenwithout consulting your own profession-al tax advisors. We will be happy to helpyou explore how you can reduce taxesand leave more to your heirs and favoritecharities with careful planning. It couldbe a very wise investment of your time.

INSIGHTSIOWA STATE UNIVERSITY FOUNDATION

A CHARITABLE PLANNING GUIDE FOR ISU ALUMNI AND FRIENDS

SUMMER 2009

PHONE: 515.294.5398TOLL-FREE: 800.621.8515www.withprideandpurpose.orggiftplanning@foundation.iastate.edu

INSIDE THIS ISSUE ...

IN THIS ISSUE ...

2 Taxation of your retirementassets

4 Retirement plan beneficiaries

5 Florine Swanson: Knowingyou’ve done the right thing

Florine Swanson’s RetirementAssets Provide an Important Gift

Taxation of Your RetirementAssets

Retirement Plan Beneficiaries

Cover Photo Identification

Visit us online at www.isugift.org

never realized it wouldstart a month after I grad-uated from Iowa State.”

Swanson eventuallywas elected to the 4-HFoundation Board andthen served as the execu-tive director of the organi-zation from 1987-2005.

During Swanson’s yearswith the 4-H Foundation,the organization became

more serious about fund raising.“We were facing major improve-ments at the (4-H) camp and wewanted to provide other opportuni-ties for young people,” she said.

Swanson has participated in anumber of fund raising efforts, notonly for 4-H, but also for otherlocal, state, national and interna-tional organizations. Her personalphilanthropy became a naturalextension of fund raising efforts.

“As I look back, most of ourphilanthropy has revolved aroundchildren and women’s issues,” shesaid. “I’m not a wealthy woman,we’re very middle class, and so mybig gifts are small in comparison toothers. But I like to think that mycontributions have made adifference — whether it’s supporting4-H or a local project that makesmy community a better place tolive. I feel like we’re investing insomething, not just giving moneyaway. And when you know thatsomething you’ve done has made adifference, you get a special feeling,knowing you’ve done the rightthing.”

Retirement Assets Provide Meaningful Gift

5

Gift Planning Staff: (L-R) Gregg Hinders, Administrative Coordinator

Lynda M. Jacobson, Assistant Vice President of DevelopmentPaul Caspersen, CFP®, CMFC, Executive Director of Development

giftplanning@foundation.iastate.edu

The information in this publication is not intended as legal advice. For legal advice, pleaseconsult an attorney. Figures cited in examples are based on rates current at the time of printingand are subject to change. References to estate and income tax include federal taxes only;individual state taxes may further impact results.

Florine Swanson

The upshot is that it often makessense to — • fulfill family bequests with non-

IRD assets that do not carryincome tax burdens, and

• use IRD items, such as retirementplan assets and IRAs, to makecontributions to qualifiedcharitable organizations such asIowa State University.

Example: Bill, a widower andloyal supporter, intends to make agenerous bequest to Iowa StateUniversity in his will. The bequestwill be in the form of XYZ stock. Heplans to leave the balance of hisestate, including significant retire-ment plan accumulations, to his twoadult children. Here is the likely taximpact (in 2009) of his current planon his retirement plan assets:

Top federal estate tax bracket of his estate 45%

Top state death tax bracket of his estate 8%

Top federal income tax bracket of his heirs 35%

Top state income tax bracket of his heirs 4%

Less: federal income tax deduction for federal estate tax paid on IRD –30%*

Effective rate of combined taxes 62%

*This will depend on how large the retirement planassets are as a percentage of the estate. We havemade an assumption here for illustration.

Under Bill’s current strategy, only38 percent of his retirement plan

Iowa State University Foundation INSIGHTS

Retirement Assets in a Non-taxable EstatePlanning Still Has Important Benefits

What if you don’t anticipate that your estate will be subject to the federal estate tax?(The estate tax exemption amount is $3.5 million in 2009.) Should you still be concernedabout your retirement assets and how they might be distributed at your death?

The answer is an emphatic “yes.” It doesn’t matter how large your estate might be,retirement plan assets received by heirs are considered income in respect of a decedent(IRD), and they are subject to income tax that must be paid by your heirs. On the otherhand, if Iowa State receives the retirement plan assets, we pay no income tax — the fullamount becomes available to further our work. Thus, if you want to support us or anotherworthy philanthropic organization through your estate plan, retirement plan assets maybe an excellent option. Other assets that are not subject to federal income taxation canbe left to your children or other heirs. This helps assure that your estate assets have thegreatest possible impact on the people and organizations most important to you.

If you’re like many of our friends and supporters,you’ve worked hard, invested wisely and built a retire-ment nest egg over the years. Whether you are alreadyretired or perhaps looking forward to its arrival, finan-cial and estate planning have become more criticalthan ever with the volatility of the stock market andour ever-changing tax laws.

Much of your accumulated wealth is probably insome form of retirement plan — an employer’s pen-sion or profit-sharing plan, a Keogh plan if you areself-employed, or perhaps a salary deferral plan suchas a 401(k) or 403(b) plan. In all likelihood, you alsohave one or more traditional IRAs. All offer uniqueopportunities for growth because the amounts in suchplans generally are not subject to income taxationuntil the funds are withdrawn.

With the recent performance of the stock market,smart management of retirement plan assets is critical.On top of disappointing market results, a downside oftax-deferred accumulation of retirement plan assetscomes when you or your heirs take distributions fromyour retirement account, and taxes have to be paid onretirement wealth. For most retirement accounts,

whatever comes out is taxableincome — even if the accountvalue is substantially less than itwas some months or years ago.

In this issue of Insights, welook at the “hidden taxes” thatcan severely deplete your retire-ment accumulation. It might stunyou and your heirs to see how your thrift and wiseinvestment decisions can wind up providing less thanwhat you were counting on. You also will see howsmart gift planning can help minimize your total taxburden and, at the same time, enable you to do moreto fulfill your philanthropic objectives and help IowaState University.

Lynda M. JacobsonAssistant Vice President of Development Office of Gift Planningljacobson@foundation.iastate.edu515.294.4049 y 800.621.8515

These assets are “tax-cursed”because they are potentially subjectto both the federal estate tax andthe federal income tax.

For example, when a distributionis made from a tax-deferred retire-ment account, the government“makes up” tax-wise for letting youavoid federal income taxes on (1) contributions to the plan and(2) the investment earnings insidethe plan while the account wasbuilding. If this distribution occursafter the plan participant’s death,the federal estate tax may apply tothe decedent’s estate, as well as theincome tax on the distribution. So,the heirs are left with the unpleas-ant possibility of double taxation —or even quadruple taxation whenstate taxes are applicable.

Federal tax law allows an estatebeneficiary who has received IRD(an asset that is subject to federalincome tax) to deduct the federalestate tax paid on the IRD forincome tax purposes.Nonetheless,even with this partial tax relief, IRDitems are not as attractive to estatebeneficiaries as other types of prop-erty which carry no income tax con-sequences.

There is another important con-sideration: If the recipient of theIRD item is an income tax exemptcharitable organization, there is noincome tax liability when the IRDitem is received. In addition, theestate itself can deduct charitablebequests in computing federal andstate death taxes.

How Much Will Be Lost to Death Taxes?If a retirement plan participant hasassets remaining in the plan atdeath and bequeaths them to indi-vidual heirs (other than a survivingspouse), the remaining accumulationat death will be subject to federalestate taxation. The federal estatetax rate is 45 percent on taxableestates over $3.5 million (in 2009).

State death taxes can depleteretirement accounts even more at aparticipant’s death. Moreover, manystates have raised their death taxesin the past few years because of fiscal shortfalls and unfavorablechanges in federal laws.

Why It Pays to Know about “Income in Respect of a Decedent”From a tax point of view, someassets carry a heavier tax burdenthan others. Such is the case withthose classified as “income inrespect of a decedent.” If thissounds complicated, stay with us aswe explain income in respect of adecedent, or “IRD.” Planning withan eye on IRD can provide impor-tant tax relief.

When your life insurance bene-fits are paid to your beneficiary, oryou leave securities or real estate toan heir, such property is potentiallysubject to the federal estate tax —but not to the federal income tax.This contrasts with the treatment ofcertain assets that the law calls IRD.

Find a planning option thatbenefits you and Iowa State We hope you have found useful ideas in thisissue of Insights. To further aid your planning,send for a complimentary copy of the bookletslisted below, with no obligation. Simply fill outthis tear-off card, fold, tape it on the open end,and drop it in the mail to us. We’ll pick up thepostage.

Please send a complimentary copy of:

The Charitable Gift Annuity — Back toBasics, a brochure detailing how giftannuities work, and the benefits for adonor.

Personal Financial Affairs: Your Book ofRecords, a helpful planning guide fordocumenting important information.

I’m interested in a no-cost, no obligationillustration of the benefits of a charitablegift annuity.

I’m interested in discussing the variousways to support Iowa State. Please contact me____ by phone____ by e-mail to talk about these possibilities.

Please sign me up for your free e-newsletter. E-mail address below.

NAME

ADDRESS

CITY

STATE, ZIP

TELEPHONE

E-MAIL

INGA0509

Sound Planning Is More Critical than Ever

Visit us online at www.isugift.org

assets will be left to his children —hardly what Bill was hoping toachieve after all those years of hardwork, thrift and smart investmentchoices.

As an alternate strategy, Bill candesignate Iowa State as a beneficiaryor partial beneficiary of the retire-ment plan. The assets will not besubject to income taxes or deathtaxes to the extent they are used tosatisfy the bequest to us. What’smore, the XYZ stock, if left to thechildren, will receive a “stepped-upbasis” to its fair market value at

Taxation of Your Retirement Assets: Some Facts You Need to Know

2 43

Retirement plan assets are potential-ly exposed to a harsh, multi-pronged tax system: federal incometaxes, federal estate taxes, stateincome taxes and state death taxes.Some people who fail to carefullyplan may see these combined taxestake a substantial toll on theirretirement accumulation — hardlythe reward they expected from yearsof hard work and sacrifice. Here’s abrief overview showing how thesetaxes can affect your retirementaccount and what you can do tostop the tax erosion of your retire-ment nest egg.

How Much Will Be Lost to Income Taxes?Retirement plan distributions gener-ally are taxable as ordinary incomein the year received. Under the cur-rent federal income tax laws, themarginal tax rate on ordinaryincome can be as high as 35 percent.

If your state and/or locality leviesan income tax, the distribution mayalso be subject to these taxes, whichcould add several more percentagepoints to the income tax depletion.

Moreover, “premature” distribu-tions may trigger a 10 percentpenalty tax in addition to the regu-lar income tax. Generally, a distribu-tion is premature if taken before age591/2, unless certain exceptionsapply. A plan distribution followinga participant’s death is one of theexceptions, so the 10 percent tax isonly a factor for lifetime distribu-tions.

How to Name Iowa State as a Retirement Plan Beneficiary

The easiest way to donate retirement plan assets is to designate us as abeneficiary. At your request, the plan administrator will send you the cor-rect form to sign. If you are married, your spouse will need to waive hisor her rights to the survivor benefits from the plan (though this is not thecase for IRAs). Be sure to consult your financial and tax advisors to dis-cuss how this idea fits in with your overall planning.

Bill’s death, which may save capitalgains taxes for the children shouldthey later sell the stock. In this sce-nario, everyone comes out ahead.

Bill is like many of our friendsand supporters who want to make alasting expression of their commit-ment to our education mission. Byfunding his generous gift withretirement plan assets, he can real-ize his philanthropic dream at a farlower after-tax cost than might bepossible otherwise, and still providefor his family.

FPO

The upshot is that it often makessense to — • fulfill family bequests with non-

IRD assets that do not carryincome tax burdens, and

• use IRD items, such as retirementplan assets and IRAs, to makecontributions to qualifiedcharitable organizations such asIowa State University.

Example: Bill, a widower andloyal supporter, intends to make agenerous bequest to Iowa StateUniversity in his will. The bequestwill be in the form of XYZ stock. Heplans to leave the balance of hisestate, including significant retire-ment plan accumulations, to his twoadult children. Here is the likely taximpact (in 2009) of his current planon his retirement plan assets:

Top federal estate tax bracket of his estate 45%

Top state death tax bracket of his estate 8%

Top federal income tax bracket of his heirs 35%

Top state income tax bracket of his heirs 4%

Less: federal income tax deduction for federal estate tax paid on IRD –30%*

Effective rate of combined taxes 62%

*This will depend on how large the retirement planassets are as a percentage of the estate. We havemade an assumption here for illustration.

Under Bill’s current strategy, only38 percent of his retirement plan

Iowa State University Foundation INSIGHTS

Retirement Assets in a Non-taxable EstatePlanning Still Has Important Benefits

What if you don’t anticipate that your estate will be subject to the federal estate tax?(The estate tax exemption amount is $3.5 million in 2009.) Should you still be concernedabout your retirement assets and how they might be distributed at your death?

The answer is an emphatic “yes.” It doesn’t matter how large your estate might be,retirement plan assets received by heirs are considered income in respect of a decedent(IRD), and they are subject to income tax that must be paid by your heirs. On the otherhand, if Iowa State receives the retirement plan assets, we pay no income tax — the fullamount becomes available to further our work. Thus, if you want to support us or anotherworthy philanthropic organization through your estate plan, retirement plan assets maybe an excellent option. Other assets that are not subject to federal income taxation canbe left to your children or other heirs. This helps assure that your estate assets have thegreatest possible impact on the people and organizations most important to you.

If you’re like many of our friends and supporters,you’ve worked hard, invested wisely and built a retire-ment nest egg over the years. Whether you are alreadyretired or perhaps looking forward to its arrival, finan-cial and estate planning have become more criticalthan ever with the volatility of the stock market andour ever-changing tax laws.

Much of your accumulated wealth is probably insome form of retirement plan — an employer’s pen-sion or profit-sharing plan, a Keogh plan if you areself-employed, or perhaps a salary deferral plan suchas a 401(k) or 403(b) plan. In all likelihood, you alsohave one or more traditional IRAs. All offer uniqueopportunities for growth because the amounts in suchplans generally are not subject to income taxationuntil the funds are withdrawn.

With the recent performance of the stock market,smart management of retirement plan assets is critical.On top of disappointing market results, a downside oftax-deferred accumulation of retirement plan assetscomes when you or your heirs take distributions fromyour retirement account, and taxes have to be paid onretirement wealth. For most retirement accounts,

whatever comes out is taxableincome — even if the accountvalue is substantially less than itwas some months or years ago.

In this issue of Insights, welook at the “hidden taxes” thatcan severely deplete your retire-ment accumulation. It might stunyou and your heirs to see how your thrift and wiseinvestment decisions can wind up providing less thanwhat you were counting on. You also will see howsmart gift planning can help minimize your total taxburden and, at the same time, enable you to do moreto fulfill your philanthropic objectives and help IowaState University.

Lynda M. JacobsonAssistant Vice President of Development Office of Gift Planningljacobson@foundation.iastate.edu515.294.4049 y 800.621.8515

These assets are “tax-cursed”because they are potentially subjectto both the federal estate tax andthe federal income tax.

For example, when a distributionis made from a tax-deferred retire-ment account, the government“makes up” tax-wise for letting youavoid federal income taxes on (1) contributions to the plan and(2) the investment earnings insidethe plan while the account wasbuilding. If this distribution occursafter the plan participant’s death,the federal estate tax may apply tothe decedent’s estate, as well as theincome tax on the distribution. So,the heirs are left with the unpleas-ant possibility of double taxation —or even quadruple taxation whenstate taxes are applicable.

Federal tax law allows an estatebeneficiary who has received IRD(an asset that is subject to federalincome tax) to deduct the federalestate tax paid on the IRD forincome tax purposes.Nonetheless,even with this partial tax relief, IRDitems are not as attractive to estatebeneficiaries as other types of prop-erty which carry no income tax con-sequences.

There is another important con-sideration: If the recipient of theIRD item is an income tax exemptcharitable organization, there is noincome tax liability when the IRDitem is received. In addition, theestate itself can deduct charitablebequests in computing federal andstate death taxes.

How Much Will Be Lost to Death Taxes?If a retirement plan participant hasassets remaining in the plan atdeath and bequeaths them to indi-vidual heirs (other than a survivingspouse), the remaining accumulationat death will be subject to federalestate taxation. The federal estatetax rate is 45 percent on taxableestates over $3.5 million (in 2009).

State death taxes can depleteretirement accounts even more at aparticipant’s death. Moreover, manystates have raised their death taxesin the past few years because of fiscal shortfalls and unfavorablechanges in federal laws.

Why It Pays to Know about “Income in Respect of a Decedent”From a tax point of view, someassets carry a heavier tax burdenthan others. Such is the case withthose classified as “income inrespect of a decedent.” If thissounds complicated, stay with us aswe explain income in respect of adecedent, or “IRD.” Planning withan eye on IRD can provide impor-tant tax relief.

When your life insurance bene-fits are paid to your beneficiary, oryou leave securities or real estate toan heir, such property is potentiallysubject to the federal estate tax —but not to the federal income tax.This contrasts with the treatment ofcertain assets that the law calls IRD.

Find a planning option thatbenefits you and Iowa State We hope you have found useful ideas in thisissue of Insights. To further aid your planning,send for a complimentary copy of the bookletslisted below, with no obligation. Simply fill outthis tear-off card, fold, tape it on the open end,and drop it in the mail to us. We’ll pick up thepostage.

Please send a complimentary copy of:

The Charitable Gift Annuity — Back toBasics, a brochure detailing how giftannuities work, and the benefits for adonor.

Personal Financial Affairs: Your Book ofRecords, a helpful planning guide fordocumenting important information.

I’m interested in a no-cost, no obligationillustration of the benefits of a charitablegift annuity.

I’m interested in discussing the variousways to support Iowa State. Please contact me____ by phone____ by e-mail to talk about these possibilities.

Please sign me up for your free e-newsletter. E-mail address below.

NAME

ADDRESS

CITY

STATE, ZIP

TELEPHONE

E-MAIL

INGA0509

Sound Planning Is More Critical than Ever

assets will be left to his children —hardly what Bill was hoping toachieve after all those years of hardwork, thrift and smart investmentchoices.

As an alternate strategy, Bill candesignate Iowa State as a beneficiaryor partial beneficiary of the retire-ment plan. The assets will not besubject to income taxes or deathtaxes to the extent they are used tosatisfy the bequest to us. What’smore, the XYZ stock, if left to thechildren, will receive a “stepped-upbasis” to its fair market value at

Taxation of Your Retirement Assets: Some Facts You Need to Know

FPO

split fifty-fifty between the Collegeof Agriculture and Life Sciences(from which her husband Ronald,’61 farm operations, graduated) andthe 4-H Foundation.

Retirement accounts likeSwanson’s often are exposed toincome tax and estate taxes thatmay be avoided or reduced throughsound planning. By naming the 4-HFoundation and ISU Foundation asbeneficiaries of her retirementaccount, Swanson will provide animportant gift and benefit from sig-nificant tax savings.

The meaningful gift to the 4-HFoundation is important because 4-His in her blood. Swanson joined 4-Has a 10-year-old and remained activethrough her freshman year in col-lege. After graduating from IowaState (’64 home economics educa-tion), marrying Ronald and movingto a farm north of Webster City, 4-Hcame calling again. “Two younggirls came to our door and wantedto know if I would be their 4-Hleader,” Swanson recalled. “I hadgotten so much out of 4-H while Iwas a youth I wanted to give back. I

Christian Petersen’s sculpture, “ThePrice of Victory,” has always held aspecial spot in Florine Swanson’sheart. The sculpture of a dyingWorld War II solider reminded herof her father, himself a veteran ofthat war who lost a hand in combat.The disability payments from thatinjury eventually helped paySwanson’s tuition, room and boardat Iowa State University.

“The sculpture looked so muchlike my father,” she said. “I was verytaken by that.” So taken that sheattempted to persuade her motherto help fund the restoration of thesculpture. The attempt was unsuc-cessful.

When her mother died, Swansonlearned that her mother’s thoughtfuland frugal efforts had resulted in anunexpected inheritance forSwanson. “After she died I thoughtI could use part of the inheritance Ireceived to do something that I hadwanted her to do while she wasalive,” Swanson said.

So, in memory of her parents,Swanson gave some of that inheri-tance to University Museums torestore the Petersen sculpture.

While that wasn’t the first giftSwanson made to Iowa State, at thetime it was the largest gift she hadmade. Since then, the self-described“middle class” woman has contin-ued to support Iowa State in a num-ber of areas. She has also planned agift to come via her retirementassets from her days as executivedirector of the 4-H Foundation oncampus. The deferred gift will be

IOWASTATEUNIVERSITYFOUNDATION

2505 UNIVERSITYBOULEVARD

P.O.BOX2230AMES, IA 50010-2230

OFFICE OF GIFT PLANNING

2505 UNIVERSITY BOULEVARD

P. O. BOX 2230AMES, IA 50010-2230

How to Learn More about Planningwith Retirement AssetsWe’ve prepared a brochure whichanswers many questions about the charitable use of retirement plan assets.It’s called Retirement Plan Assets —Leaving More to Your Family andCharity. You can receive a complimentarycopy simply by returning the attachedcard.

The tax ramifications of retirementplan distributions are extremely complexand action should not be undertakenwithout consulting your own profession-al tax advisors. We will be happy to helpyou explore how you can reduce taxesand leave more to your heirs and favoritecharities with careful planning. It couldbe a very wise investment of your time.

INSIGHTSIOWA STATE UNIVERSITY FOUNDATION

A CHARITABLE PLANNING GUIDE FOR ISU ALUMNI AND FRIENDS

SUMMER 2009

PHONE: 515.294.5398TOLL-FREE: 800.621.8515www.withprideandpurpose.orggiftplanning@foundation.iastate.edu

INSIDE THIS ISSUE ...

IN THIS ISSUE ...

2 Taxation of your retirementassets

4 Retirement plan beneficiaries

5 Florine Swanson: Knowingyou’ve done the right thing

Florine Swanson’s RetirementAssets Provide an Important Gift

Taxation of Your RetirementAssets

Retirement Plan Beneficiaries

Cover Photo Identification

Visit us online at www.isugift.org

never realized it wouldstart a month after I grad-uated from Iowa State.”

Swanson eventuallywas elected to the 4-HFoundation Board andthen served as the execu-tive director of the organi-zation from 1987-2005.

During Swanson’s yearswith the 4-H Foundation,the organization became

more serious about fund raising.“We were facing major improve-ments at the (4-H) camp and wewanted to provide other opportuni-ties for young people,” she said.

Swanson has participated in anumber of fund raising efforts, notonly for 4-H, but also for otherlocal, state, national and interna-tional organizations. Her personalphilanthropy became a naturalextension of fund raising efforts.

“As I look back, most of ourphilanthropy has revolved aroundchildren and women’s issues,” shesaid. “I’m not a wealthy woman,we’re very middle class, and so mybig gifts are small in comparison toothers. But I like to think that mycontributions have made adifference — whether it’s supporting4-H or a local project that makesmy community a better place tolive. I feel like we’re investing insomething, not just giving moneyaway. And when you know thatsomething you’ve done has made adifference, you get a special feeling,knowing you’ve done the rightthing.”

Retirement Assets Provide Meaningful Gift

5

Gift Planning Staff: (L-R) Gregg Hinders, Administrative Coordinator

Lynda M. Jacobson, Assistant Vice President of DevelopmentPaul Caspersen, CFP®, CMFC, Executive Director of Development

giftplanning@foundation.iastate.edu

The information in this publication is not intended as legal advice. For legal advice, pleaseconsult an attorney. Figures cited in examples are based on rates current at the time of printingand are subject to change. References to estate and income tax include federal taxes only;individual state taxes may further impact results.

Florine Swanson