How do charities named as IRA beneficiaries deal with the problem of getting their beneficiary distributions from the IRA custodians?

Charities deal with this problem in different ways.

Some deep-pocket charities devote personnel to filling out the paperwork and are willing (meaning individuals who are employed by the charity are willing) to provide SSNs, home addresses, financial information, and whatever else the the IRA custodian demands.

Some charities refuse to fill out the paperwork and stand up to to the IRA custodians.  Stand up with success in some cases. Stand up because the information demanded by the IRA custodian is too intrusive for the business officer, the board members, whomever.

In my opinion – and it’s just my opinion, nothing else – charities should stand up and refuse to fill out the paperwork. What the IRA custodians demand is wrong. Wrong as a matter of law.  Charities, again in my opinion, should not go along.

I understand that often there’s a lot of money at stake.

Usually, however, the charity doesn’t know how much money is at stake, because the IRA custodian won’t tell the charity the amount of its beneficiary distribution.

So charities can waste time and resources to get a pittance. The amount in one actual situation was $0.97.

It’s a gross breach of fiduciary duties for the IRA custodian not to tell the charity how much money the charity is to receive.

Well, as I write this, things are beginning to change.

A few major financial institutions have seen the light of day and are changing their IRA beneficiary distribution procedures.  Eventually, all IRA custodians will follow suit.

That will be a good day for charities.

Click here to read Part III.

by Jon Tidd, Esq