Retirement account donations left to charities after a donor’s death are increasingly encountering delays and complications at financial institutions. While naming a charity as a beneficiary of an IRA is a straightforward and tax-efficient estate planning tool, nonprofits report lengthy waits—often months or years—due to onerous requirements imposed by some brokerages and banks. These hurdles include mandates for nonprofits to open new accounts and provide sensitive personal information about employees and board members, creating a significant administrative burden for charities striving to honor donor intent.

Nonprofit leaders such as Rob Hilbert of the Iowa PBS Foundation and Jon Kraus of the University of Denver have shared stories of prolonged and frustrating processes. Hilbert’s organization once endured a five-year exchange of paperwork to secure a $6,000 gift, while Kraus recounted a two-year wait for a $2 million IRA donation, during which the funds sat idle instead of benefiting students. These delays can force charities to divert scarce resources from mission-focused activities and occasionally lead them to forgo gifts altogether due to the bureaucratic obstacles.

Experts and advocates argue that these roadblocks violate the spirit of donor generosity and call for legislative reform. Six states have passed laws to streamline the release of charitable IRA inheritances, with California poised to join them. Such bills typically mandate timely asset transfers and prohibit financial firms from requiring nonprofits to open new accounts or submit excessive personal data. Legal experts emphasize that although financial institutions cite anti-money-laundering rules to justify stringent procedures, they are not legally obligated to impose such demands on nonprofits.

While some firms like Edward Jones and Merrill Lynch have smoother policies, the inconsistent practices across institutions frustrate charities nationwide. Meanwhile, donor advocates recommend strategies like informing charities about IRA designations ahead of time and choosing financial firms known for accommodating beneficiary charities. As trillions of dollars are expected to transfer to nonprofits through IRAs over coming decades, resolving these issues is vital to ensuring charitable gifts are efficiently realized and used as intended.