When you want to name a charity as the sole beneficiary of your Individual Retirement Account (IRA), you need to fill out the proper forms and appropriately designate the charity as your beneficiary. Although you can specify the charity in your will instead, the IRA then becomes part of your estate and is subject to probate as well as all of the rules, regulations and taxes that go along with such a situation. Using the designation form will preserve the funds in the IRA.
1. Get a beneficiary designation form from the financial institution where your IRA is located. This needs to be filled out for the IRA you want to bequeath to a charity.
2. Fill in the form completely. Write with ink, preferably in a dark color. Be sure that the IRA account is clearly identified. Be specific about the exact charity that you want to receive the funds from your IRA. Don’t use abbreviations or initials - write out the name and any other necessary identifying information for the charity you have selected. Indicate that the charity is the sole beneficiary in the appropriate place on the form.
3. Have your spouse sign the form if you are married and live in a state that requires it. States that have community property laws, such as California, Nevada and Texas, require the signature of a spouse if you are leaving some or all of an IRA to someone else.
4. Notarize the beneficiary form if requested to do so. In most cases this isn’t necessary, but if you have any concerns that your choices may be challenged, you may want to have it notarized.
5. Sign the completed form in ink. You must then return the form to your financial institution. Because this is a legal document the original must be on file so you can’t fax it or send a copy. You can mail or hand deliver the form to the account holder to complete your beneficiary designation.
- You can change your IRA beneficiary whenever you want. There are no taxes on the procedure and the trustee holding your account should not charge you for the change. It is a good idea to supply a copy of the beneficiary designation form to the charity for its records.
- The last beneficiary that shows on your IRA beneficiary form is the one who will inherit the account. This is true even if you have designated another person or entity in your will. Be sure to list the charity on the IRA form as well as in your will to ensure that it receives the account.
Items you will need
- Beneficiary designation form
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