Daniel Wang, who will graduate from Baylor College of Medicine in 2019, with scholarship donor, Virginia Clark

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1 CREATING legacies Making an impact on medicine SPRING/SUMMER 2017 Daniel Wang, who will graduate from Baylor College of Medicine in 2019, with scholarship donor, Virginia Clark Virginia Clark: Making an Impact Through Thoughtful Giving Virginia Clark and Baylor College of Medicine enjoy a long relationship. Sarah Selleck, M.D., assistant professor in the Section of Geriatrics, served as Ms. Clark s late mother s doctor and provided an impressive level of comfort and care. She was so considerate, never once condescending, just unbelievably patient. She was incredible, says Ms. Clark of Dr. Selleck. Witnessing Dr. Selleck and her team go the extra mile to ensure a greater quality of life for a beloved family member inspired Ms. Clark to begin her philanthropic journey with Baylor College of Medicine. She and her sibling gave a gift to the College in honor of Dr. Selleck. Later, she restructured her Individual Retirement Account (IRA) to make the College s Huffington Center on Aging one of its major beneficiaries. She points out that using an IRA to make a gift to the College is one of the most cost-effective methods of contributing. In addition to support of the program that gave her mother comfort, Ms. Clark also looks to the future with an endowment to support medical student scholarships. Young doctors are graduating frequently with a significant amount of debt and that constrains them to go into high-paying specialties that s not where we really need more people, Ms. Clark explains, continued on page 5 1

2 Retirement Assets: Three Important Questions to Consider This issue of Creating Legacies looks at important questions that affect personal planning for retirement including ways to increase assets that already have been accumulated. It also offers simple ideas in charitable giving that can complement an overall retirement plan and even improve your financial landscape. Our goal is to help you make the most of your retirement assets. Are You Fully Funded? The most important retirement principle is also the simplest: Your income after retirement ultimately depends on what you set aside during your years of working and saving. If you are currently in the working and saving mode, Retirement Planning 101 calls for fully funding your IRA and/or other employer-sponsored retirement plan by making the maximum allowable contributions. Tax-favored contributions and tax-deferred earnings make retirement plans the logical first step in saving taxes and accumulating retirement assets. If you are age 50 or over and have not contributed the maximum amount each year to your plan, you also can use the catchup provisions to, as the name implies, catch up. Example: Alex, age 60, wants to maximize the amount of money he can set aside for retirement. His 401(k) plan allows him to make the maximum contribution ($18,000 for 2017) plus the catch-up amount, so his total contribution is $24,000 this year. He plans to use this strategy for the next several years to significantly boost his retirement savings.* *All examples are for illustrative purposes only. 2

3 Retirement Plan 2017 Catch-up Contribution Limit Contribution Limit* 401(k), 403(b), and $18,000 $6,000 most 457(b) plans IRAs $5,500 $1,000 *Allowed for age 50 and over What If the Choice Is Not Yours? When you are an IRA owner, something significant happens when you reach age 70½. This is the age you MUST begin taking annual distributions from your IRA in an amount based on your age and the total in your account. These distributions are subject to tax and referred to as one s Required Minimum Distribution or RMD. But what if you don t want them or need them? At age 70½, you don t have a choice. For philanthropically minded IRA owners, Congress has provided a unique opportunity to make a gift to Baylor College of Medicine directly from your IRA. This qualified charitable distribution or IRA charitable rollover was made permanent by 2015 legislation. There are three distinct benefits to these gifts: You pay no income tax on the distribution (subject to a $100,000 limit). You can count it toward your RMD. So, if your RMD is $25,000 and you make a qualified charitable distribution of $30,000 directly from your IRA to us, you have satisfied your RMD for You can make this gift year after year a unique and tax-wise way to meet your philanthropic goals. A gift from your IRA must be transferred directly from your IRA to Baylor College of Medicine. Contact your account custodian to arrange your gift and please notify us as well. We will verify that your gift is received and provide all of the appropriate documentation for your records. Note: Defined contribution plans, which are 401(k) plans, 403(b) plans, employee stock ownership plans and profit-sharing plans, are also subject to RMD requirements. Unfortunately, they are not eligible for the qualified charitable distribution option. Retirement Plan Assets Leaving More to Your Family and Charity discusses tax-wise gift planning and retirement income strategies in more detail. Order your free brochure online at bcm.giftinfo.today 3

4 Is There a Best Way to Give? Income in respect of a decedent (IRD) is income a person earned but did not receive before death. Because of the taxation on these assets, heirs can benefit more from receiving non-ird assets. A distribution from a tax-deferred retirement account is subject to federal income tax during life and at death. These distributions are taxed when they are received by you or your heirs because initially untaxed earnings were deposited into the account and earnings were not taxed while they accumulated. The government recovers these taxes when funds leave the account. Consequently, if you want to make a gift to Baylor College of Medicine and provide for loved ones through your estate plan, it makes sense to leave retirement assets to us (because we are taxexempt and are not required to pay tax on them) and designate to heirs assets that are subject to favorable tax treatment. Example: Lynn wants to support Baylor with a gift of $100,000 and leave the rest of her estate to her son, William. Lynn considers whether to designate us as the beneficiary of one of her IRAs or leave Baylor a gift of appreciated stock to fulfill her charitable goals. There is a distinct advantage to making her gift by naming Baylor College of Medicine the IRA beneficiary and leaving the stock to her son. When we receive IRA funds, the full amount supports our work since we are a qualifying charitable organization. By contrast, if William receives the IRA funds, all distributions are subject to income tax. It would be better for William to receive stock. Not only is no income tax due on the transfer, but the stock receives a step up in basis, which shields from income tax the appreciation Lynn enjoyed. When William sells the stock, he pays tax only on the amount the stock appreciates after inheritance.* Benefit From a Retirement Strategy Whether you are building a retirement nest egg or already enjoying retirement, you and your heirs can benefit from a sound strategy. Please feel free to contact us for additional information about taxwise gift planning and supplemental retirement income strategies. We will be happy to answer your questions and send you our free brochure, Retirement Plan Assets Leaving More to Your Family and Charity. We welcome the opportunity to help you realize your longterm planning and philanthropic goals. You have the right to decline future education and development communications. If you do not want us to contact you for our fundraising efforts, please contact the Office of Philanthropy and Alumni Relations at or optout-development@bcm.edu. Be sure to consult your tax and financial advisors when considering any planned gift. 4

5 Virginia clark continued from page 1 We need more family doctors, geriatricians, pediatricians, OB-GYNs Those are the areas where we really need more physicians, but financial pressures force them to become specialists. It s a vicious circle. As a retired geophysicist, Ms. Clark enjoys knowing that her donations have sent students and faculty to conferences, exposing them to some of the most innovative medical research being conducted today. She knows how exciting it can be to see firsthand the scientific advances on the horizon and how direct exposure to industry leaders enriches a lifelong education. What I hope is that we will be educating more young physicians who will be in charge of giving the appropriate level of care so that, if we re lucky enough to age, you don t end up [being] overtreated, she says. In addition to her work with students, Ms. Clark serves on the Center for Medical Ethics and Health Policy Advisory Council and holds a lifetime membership with The Partnership for Baylor College of Medicine. A regular attendee of Partnership events, she lauds the volunteer group s work in making the College s world-class science accessible to a general audience. Supporting education honors past achievements and ideas but also paves the for a better future, Ms. Clark says. Jaworski Society Members of the Jaworski Society, and medical and graduate students met in March to hear an update from Paul Klotman, M.D., president, CEO and executive dean. He discussed the College s mission areas: education, clinical care, research and community outreach. New Jaworski Society members included Chancellor Emeritus William T. Butler, M.D., and his wife Carol who were honored for their planned gift to Baylor and for Dr. Butler s leadership as past president of the College. From left, Dr. Klotman, Carol Butler and Dr. Butler. From left, Dr. Butler, Barbara Walker and Philip B. Rothenberg, M.D. 5

6 JAWORSKI SOCIETY Members of the Jaworski Society help Baylor College of Medicine fulfill its mission by including the College in their wills, trusts, retirement plans or other financial plans. Private philanthropy is critical to the College s success and its ability to maintain excellence in each of its mission areas. Kristi S. Cooper Vice President, Philanthropy and Alumni Relations kgc@bcm.edu Lydia Luz, J.D. Director of Gift Planning lydia.luz@bcm.edu More information and complimentary brochures are also available from our website: www. givingyourway. org/bcm. Office of Philanthropy and Alumni Relations Baylor College of Medicine One Baylor Plaza, MS: BCM160 Houston,TX BAYLOR COLLEGE OF MEDICINE To learn more, contact us: Rachel S. Kronenberger Assistant Director of Gift Planning rachel.kronenberger@bcm.edu

7 Equip Yourself to Build a Sound Strategy Make the most of your retirement assets n Please send your free brochure, Retirement Plan Assets Leaving More to Your Family and Charity. n Tell me more about making a qualified charitable distribution from my IRA to Baylor College of Medicine that also counts toward my required minimum distribution. n I have included Baylor College of Medicine in my estate planning. n I would like to know more about: Please tear off the card, fold in half and tape closed to mail. Please contact me at: NAME ADDRESS CITY/STATE/ZIP PHONE You can also order your free brochure online by visiting bcm.giftinfo.today

8 OFFICE OF PHILANTHROPY AND ALUMNI RELATIONS BAYLOR COLLEGE OF MEDICINE ONE BAYLOR PLAZA MS: BCM160 HOUSTON TX