Tax-deferred savings plans such as Individual Retirement Accounts, Keogh Accounts,
401 (k) plans, and others were created as savings tools for retirement, not
as inheritance plans. When the plan ends (often at the end of the plan participant's
life or that of a spouse), the proceeds are potentially subject to several
forms of taxation: income tax, estate tax, and generation-skipping tax (if
grandchildren are included in the estate settlement).
An estate or inheritance
tax may also be added, depending on where the participant lives. If qualified
retirement assets remain in the estate, the cumulative effect of these taxes
could result in more than 60 percent of the retirement assets being consumed
by taxes.
By naming Bard College as a plan beneficiary, tax-deferred retirement
plans pass directly to the College outside of the estate and are not subject
to income or estate taxes. This can be accomplished on a Change of Beneficiary
form indicating the amount or percentage of assets to be contributed to Bard.
The beneficiary can be changed again at any time.
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