Retirement Benefits

If you are planning to divide your estate between the University of Idaho and your heirs, there can be significant tax advantages  — both income and estate — to naming the University as beneficiary of your IRA, 401(k) or other qualified retirement plan, and leaving other assets to your heirs. The reason is that qualified retirement plans have a built-in feature called IRD — income in respect of a decedent. Inasmuch as the money was originally placed in your plan pre-tax, the tax laws dictate that it will be taxed when it comes out, either as you make withdrawals in your retirement or at your passing. However, by naming the University as a residuary beneficiary, you avoid the IRD as well as any estate taxes that may otherwise be applicable.