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Planned Giving

Retirement Gifts

Retirement Gifts

A designation in your IRA or other retirement plan may be a very cost-effective way of making a gift to Catholic Charities. If you leave your retirement plan to your children, they will have to pay income tax on either a lump sum distribution or the income stream from the plan. Catholic Charities does not pay this tax. Here’s an example of what this can mean to your heirs:

A widower died a few years ago. He left his $300,000 house to charity and his $300,000 retirement plan to his relatives. He should have done just the opposite. The relatives had to pay income tax on the $300,000 in the retirement plan, an $80,000 cost to them. If they had received the home, and the charity had received the retirement plan payment, no one would have paid income tax.

For more information on the advantages of retirement gifts to Catholic Charities, call 415 972 1354.

Charitable IRA Rollover

Tax-free IRA contributions to public nonprofit organizations like Catholic Charities are now a permanent fixture of the tax code.  Here’s what you need to know:

What is a charitable IRA rollover? It is a way for individuals 70½ and older to transfer funds from their traditional IRAs to good causes without triggering a taxable event.

Will this opportunity end this year?  No. Allowed since 2006, tax-free charitable IRA transfers were finally made a permanent part of the law in 2015.

What type of donors benefit? Donors who do not itemize their taxes receive the equivalent of an itemized charitable deduction because their IRA distribution is not taxed.  Donor’s who do itemize, but whose use of their charitable deduction is limited or reduced by current regulations: the IRA rollover is not subject to those limitations.  And, finally, donors who like the convenience of writing one letter that takes care of their annual charitable commitments.

Are there any limitations on the amount that can be contributed in a given year this way?  Yes.  If donors contribute more than $100,000 from an IRA to charity, every dollar above the $100,000 limit is taxable at ordinary income tax rates.

Must donors make the transfer all at once?  No.  Like any charitable gift, IRA transfer to charities can be made any time during a given year until the end of that year.

Do IRA charitable IRA transfers count as part of the donor’s required minimum distribution?  Yes they do.  IRA distributions in excess of the required minimum distribution, however, cannot be carried forward.

Can donors also deduct their charitable rollover?  No, they cannot. Because the tax otherwise due on the traditional IRA distribution is forgiven they have already received a charitable tax benefit.

What must a donor do to make a qualified charitable IRA distribution?

The donor must take care that:

  • The IRA owner is 70½ or older at the time of the distribution
  • The transfer is no more than $100,000 for the year.
  • The IRA custodian, not the donor, makes the contribution directly to a public nonprofit organization.

For more information on the advantages of retirement gifts to Catholic Charities, call 415 972 1354.

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