When you opened an Individual Retirement Account (IRA), you may have rushed to make a contribution by the tax filing deadline. But how much thought did you put into selecting its beneficiary?

When you establish an IRA, you are required to select at least one beneficiary who will receive these assets upon your death. While your beneficiary can be an individual, did you know you that you also have the option to select a nonprofit organization as your beneficiary?

One of the primary benefits of designating a charitable organization as your IRA beneficiary is that your assets will not be taxed when they pass to your beneficiary upon death, as 501(c)(3) organizations do not pay income tax. However, for individual beneficiaries, the entire amount of a traditional IRA is fully taxable at ordinary tax rates.

So if you designate an individual as your beneficiary, that person will be subject to ordinary income tax on any withdrawals from the IRA, which generally must begin immediately upon transfer. So, for example, if you have a $1 million IRA, passing the asset to a charitable organization rather than an individual would allow the full amount of the account to go directly to the nonprofit and save a significant amount of money that would otherwise be paid in traditional income taxes.

If your familial heirs, such as children or grandchildren, are already provided for, donating your IRA to a nonprofit organization that is meaningful to you can provide great satisfaction. Perhaps you have a special charitable dream that you would like to fulfill. Or maybe you feel strongly about a particular cause.

For some, their lives or the life of a loved one has been helped by a specific organization. Designating a nonprofit that has meaning to you as your IRA beneficiary is a great opportunity to create a legacy, pass along your values to future generations and help others.

There are different strategies to consider when designating a charitable organization as beneficiary of your IRA and I strongly encourage you to discuss options with your financial advisor or contact Heather Sherwin at the Community Foundation for more information. Further reading:

• The IRA Charitable Rollover is Back, Wall Street Journal
• Fiscal Cliff Deal Allows Giving  IRA Assets to Charity, Forbes
• IRA Donations Get a Break, Wall Street Journal

About the Author Michael Oana is the owner of Michael Oana Retirement Planning Specialists located in Columbia, S.C. He is responsible for all investment related decisions made by the firm and offers independent advice, customize investment plans and personalize service. Michael resides in the historic Shandon neighborhood, and is married to Heather. They have two children, London and Lane. In his spare time, he loves to read, travel and watch college football.