When Jesus said, “It is more blessed to give than to receive,” He probably had no idea how complicated giving would become two millennia later. A more pragmatic (though lengthier) variation for today might be: “It’s best to give wisely to a worthy charity – while keeping more of what’s yours.”
You can do just that, thanks to a number of financial options worth exploring. One of the best is the Charitable IRA Rollover.
By using the Charitable IRA Rollover, a donor age 70½ or older can make direct transfers to qualified charities of up to $100,000 per year from his or her individual retirement account, without having to deem the transferred funds as income for federal tax purposes. Although the transferred amount does not qualify for an income tax charitable deduction, the amount can be counted toward a donor’s required minimum distribution. One such qualified charity, the Orange Catholic Foundation (OCF), raises funds and provides fundraising resources for the Diocese of Orange.
“The Charitable IRA Rollover has been available to donors since 2006,” says Cindy Bobruk, the Foundation’s executive director and president. “Rollover funds must be distributed during the calendar year to benefit a Diocesan parish, school or ministry; it may be used to benefit an endowment fund at the OCF; or it can be given to support the renovation of Christ Cathedral.”
Many donors have opted to not use their IRAs for lifetime gifts, since withdrawals are taxed as income. The Charitable IRA Rollover, however, eliminates this problem.
“In some cases a donor may find it more advantageous to make their gift now and see the impact of their gift during their lifetime, as opposed to naming the charity as a beneficiary of their IRA,” Bobruk says. “The Charitable IRA Rollover allows donors who may not qualify for a charitable deduction on their income taxes or may not qualify to claim all of their charitable gifts, to direct a charitable gift of income that is not taxable. Not being taxed on income is the equivalent of a charitable deduction. This rollover allows an individual donor to direct their required minimum distribution [RMD] or more up to the maximum of $100,000 per individual in one calendar year to a charity.”
Bobruk notes that a donor’s plan administrator of an IRA must make distributions directly to the donor’s charity. And while other retirement vehicles – such as the 401(k), 403(b), SEP and SIMPLE plans – don’t qualify, they can be rolled into a new or existing IRA, and then transferred through the IRA Rollover to the OCF.
When Don Schnake first heard about the Charitable IRA Rollover, it was like music to his ears. He has agreed to use the Rollover to match the first $200,000 donated to the Hazel Wright Organ Fund, established at the OCF to help pay for the maintenance and continual updating of one of the largest pipe organs in the world.
“I’ve loved organs and organ music ever since high school,” the 79-year-old Schnake says. “Many famous musicians have performed on the Hazel Wright Organ.”
Schnake served as an usher for many years at the Crystal Cathedral and the Segerstrom Center. While it felt great to be of service, “I especially enjoyed the organ music,” he says.
While individual donors have until April 1, 2019, to take or withdraw their required minimum distribution, “The funds must be received by a qualified public charity such as the Orange Catholic Foundation no later than December 31 of the RMD year, in order to qualify as a Charitable IRA Rollover,” Bobruk says. “Since the end of 2018 is fast approaching, donors should contact their brokers now and confirm the approaching deadlines to take their RMD this year.”
“For many years, I’ve dreamed of giving a large amount to a worthy charity,” Scnhake says. “I couldn’t do this without the IRA Rollover.”
For Schnake, and many others like him, that dream has become a reality.
For more information on how to complete a Charitable IRA Rollover, call 714.282.3021 or visit orangecatholicfoundation.org/giving/how-to-give/.