Planned Giving

IRA Rollover

Gift of IRA Rollover Assets Story:
Paul is a long-time supporter of St. John’s School, having given to the Annual Fund every year since his graduation 55 years ago. Those gifts have grown over time from a nominal amount in the early years to $5,000 in the most recent cycle. Professionally, Paul founded and built his successful insurance business into a well-respected and well-managed company, and he recently sold his stake in the company to his employees, generating a significant financial benefit for himself. Being the sound investor and planner that he is, he also built a 401(k) plan for himself, a plan that he recently converted to an IRA with holdings in the range of $2 million.

Now at age 72, Paul has to withdraw a minimum required amount from that plan — 3.65% or roughly $73,000 — which is income that Paul does not need and would rather not pay taxes on. His financial advisor, who also manages the IRA for him, suggested that he roll over some of his Required Minimum Distribution (RMD) to the charities he cares about, including St. John's. In that way, Paul can make a major gift, avoid having to take the RMD, and eliminate the tax that would have come with the distribution. Now that he has access to a new source of philanthropic resources from his IRA, Paul is able to double his Annual Fund gift to 10,000, start an endowed scholarship fund with an additional gift of $25,000, and still have some of his RMD rollover available for other charitable organizations. Best of all, he can do this every year, thus building his endowment fund over the years to a sizable gift.
 
IRA Rollover – How it works:
IRA rollovers have become increasingly popular and used more frequently since the law allowing such transfer became permanent in 2015. Individuals with IRAs are required to take required minimum distributions at the age of 70½. Donors that have other sources of income and are not dependent upon those distributions can have their distributions (fully or partially) transferred to St. John’s School and avoid having to pay taxes on those distributions.

IRA Designation

IRA Designation Story – Henry Gissel ’54:
As an alumnus, parent of an alum, and grandparent, Henry Gissel ’54 was the first of three generations of Gissel family members to graduate from St. John’s School. For that reason and many more, Henry has found great satisfaction in strengthening his ties to St. John’s both financially and as the non-Executive Chairman of the Alumni Board. Over the years, Henry has generously supported St. John’s – “a school,” in Henry’s words, “that allowed me to have such a transformational experience. In giving back, I can ensure that future generations are granted the same opportunity.”
 
Originally, Henry had intended to leave a gift to St. John’s from his estate through a simple  bequest; however, having been a trust and estate attorney for 43 years, he was embarrassed that it took him so long to realize that making the same gift through his IRA could provide a “win-win” situation for both his descendants and the School. With a traditional (non-Roth) IRA, Henry knew that distributions passed on to descendants from his IRA would become taxable income to them. By making St. John’s the beneficiary of his IRA, however, these dollars could be passed on without income tax to the School, and Henry could leave his descendants other assets of equal value from his estate without income tax. This process ensures that the estate gifts his descendants receive have the least tax consequences to them and provide the same charitable benefit to St. John’s as a cash bequest.
 
IRA Beneficiary Designations – How it works:
Much like the way a donor can designate St. John’s as a beneficiary of life insurance proceeds, donors are able to identify St. John’s School as a full or partial beneficiary of an IRA at the end of their lives. The process is generally simple and similar to a life insurance change of beneficiary with no cost to the donor, but will be subject to the rules of the IRA account administrator.

Using this approach, donors have the flexibility of controlling and enjoying the use of the IRA for the duration of their lifetimes and making a deferred gift to St. John’s School at their death. If the donor’s estate exceeds the estate tax exclusion available at the time of the donor's death, designating St. John’s as a beneficiary will also qualify for an estate tax deduction in addition to avoiding any income tax on the distribution.