Retirement plans, when passed on to heirs, can incur as much as 70 percent in taxes, because this asset faces double taxation. Not only is the amount of the plan reduced by estate taxes, but the recipient must also pay income taxes on the plan.
If you plan to make a legacy gift to Boston College, you may want to consider naming the University the beneficiary of your 401(k), pension, or other retirement plan and leaving other assets to your family. Naming BC as the primary beneficiary avoids all income and estate taxes on the retirement plan and allows Boston College to benefit from the full amount in the plan.
To make the designation, advise your plan administrator of your decision and complete and sign a change of beneficiary form.
For more information, please contact the Office of Gift Planning.
The information on this site is not intended as legal, tax, or investment advice. For such advice, please consult an attorney or a tax or investment professional.