Non-Profit as a beneficiary

[Guest RAA]

Can one name a Non-profit Corp as a secondary beneficary?

Thanks in advance.

[Harwood]

I'm sure you can, but I have nothing to back it up.

[david rigby]

I thought the opposite, since the purpose of a plan is to provide a benefit to one or more persons. But I have no cites to back that up.

Most plan documents will already have a "contingency" when there is no beneficiary designation. For example, "spouse; if no spouse, then children in equal shares; if no children, then parents; if no parents, then estate”.

Also look to the plan's definition of "beneficiary".

[Harwood]

Quoting SelectBENEFIT Financial Focus, Fall 2000:

"Consider a Charity

A qualified charity will not pay any income taxes when it receives your retirement plan assets. In addition, your estate may be eligible to receive an estate tax deduction on account of your charitable deduction."

[david rigby]

That sounds like the estate is the recipient, and then gives it to the charity.

(Not sure if that distinction is significant.)

[Harwood]

403(b) Answer Book [1998], 12:19

"A participant can designate a charity as a beneficiary."

[mbozek]

There are no restictions on who can be named as a beneficary of a retirement plan. However, naming a non person as a beneficary can resulting a shorter period for distribution of benefits. By the way only entities designated under IRC 501©(3) are charities. Other NP are not eligible for charitable contributions although they can be designated as beneficaries.

[Appleby]

I agree with mbozek…

In instances where a non-person is a primary beneficiary...an individual who is one of multiple beneficiaries, where one of the beneficiaries is a charity or other non-person, may be well served to encourage the non-person to distribute their portion on the inherited assets by September 30 of the year following the year the retirement account owner dies. This will allow the remaining (individual/s) beneficiaries to use the life expectancy method to calculate post-death distributions

[E as in ERISA]

To pax' note: There may be a significant distinction between one's probate estate and one's taxable estate. The asset doesn't have to be legally held by one's probate estate in order to be included in one's taxable estate.