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Gifts from Retirement Plans

Estate Gifts:

  How It Works

1. You name St. Charles as beneficiary for part or all of your retirement-plan benefits

2. Funds are transferred by plan administrator at your death



· No federal income tax is due on the funds that pass to St. Charles

· No federal estate tax on the funds

· You make a significant gift for the programs you support at St. Charles


Retirement-plan benefits often make an excellent choice for funding a testamentary charitable gift to St. Charles. Not only will such a gift escape federal income tax, it will also avoid any potential federal estate tax. This combination of income taxes and     estate taxes could result in a tax hit of more than 63% of the retirement-plan benefits.

If, for example, you have designated your children to be the beneficiaries of $100,000 of your retirement-plan benefits, and your estate is subject to federal estate taxes, your children could lose $40,000 to federal estate taxes and as much as an additional $23,760 to federal income taxes for a total reduction in benefits of $63,760. If, however, you designate St. Charles as the beneficiary of that $100,000, the full amount will pass to us with no reduction in benefits.

IRA Rollover Gifts (Age 70 1/2 or older)

How It Works

1. You are 70½ or older and instruct your plan administrator to make a direct transfer of up to $100,000 to St. Charles

2. Plan administrator makes transfer as directed to St. Charles



· Your gift is transferred directly to St. Charles; since you do not receive the funds, they are not included in your gross income*

· Your gift will count towards your minimum distribution requirement

· You support the programs that are important to you at St. Charles


The Protecting Americans from Tax Hikes (PATH) Act of 2015, which was passed by Congress and signed into law by the president on December 18, 2015, made permanent what is popularly known as the IRA charitable rollover.

Here are the requirements and restrictions for making an IRA charitable rollover gift:

· The donor must be 70½ or older.

· The gift must be made directly from the IRA to an eligible charitable organization.

· Gifts to all charities combined cannot exceed a total of $100,000 per taxpayer for the year.

· The gifts must be outright, and no material benefits can be received in return for the gifts. Thus a transfer for a gift annuity, charitable remainder trust, or pooled income fund is not permitted.

· Gifts cannot be made to a donor advised fund, supporting organization, or private foundation.

· The gift is not included in taxable income, and no charitable deduction is allowed.

· The gift can be made only from an IRA. Gifts from 401(k), 403(b), and 457 plans are not permitted.


An IRA rollover may be the right gift for you to make if:

· You want to make a charitable gift and your IRA constitutes the largest share of your available assets.

· You are required to take a minimum distribution from your IRA, but you do not need additional income.

· You do not itemize your deductions. In that case a personal IRA distribution increases your taxable income without the benefit of an offsetting deduction. An IRA charitable rollover will not be included in your taxable income even if you do not itemize other deductions.

· You live in a state where retirement plan distributions are taxable on your state income-tax return, but your state does not allow itemized charitable deductions.

· You would like to make an additional charitable gift, but it would not be deductible because of the annual limitation of 50 percent of adjusted gross income for charitable contributions. The IRA charitable rollover is equivalent to a deduction because it is not included in taxable income.

· You have an outstanding pledge to a charity. The IRA charitable rollover can satisfy a pledge without violating rules against self-dealing.


Here is the step to take to make a gift:

· If you want to make a qualifying transfer, contact your IRA administrator and instruct that person to transfer funds to the charity(ies) you designate.

*No income-tax deduction is allowed for the transfer.

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