Wednesday, November 30, 2011

Window of Opportunity Closing (Again)

By: Laurie Valentine- COO & Trust Counsel

Included in federal tax law changes enacted in December 2010 (the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act [“Act”]) was an extension of the Charitable IRA Rollover provisions first enacted in 2006. Those provisions allow certain IRA owners to use taxable IRA funds to make charitable gifts without negative tax consequences. The 2010 extension expires December 31, 2011.

Generally, IRA owners must report distributions out of their IRA as income. A donation of an IRA distribution to charity is a charitable contribution for income tax deduction purposes (if you itemize); however, the increase in income and restrictions on the amount of charitable gifts that may be deducted in a given year could result in the IRA withdrawal followed by charitable gift not being a “wash” for federal income tax purposes.

The Charitable IRA Rollover provisions permit a person who is 70 ½ or older to make tax-free gifts in any amount up to a total of $100,000 from a traditional or Roth IRA to qualified charities (“qualified charitable distributions”). The IRA owner is not entitled to a charitable income tax deduction for the qualified charitable distributions, but such distributions are not included in the IRA owner’s income.

The distributions must be made directly from your IRA to the qualified charitable organization. A distribution to the IRA owner/donor, followed by a gift to charity, does not receive the special treatment provided by the Act.

Distributions from 401(k), 403(b) or other types of retirement accounts are not eligible for this special treatment.

Your church and our KBC and SBC agencies and institutions are “qualified charitable organizations”. Private foundations and donor advised funds are not.

While qualified charitable IRA distributions are not included in the donor’s income for income tax purposes, they are treated as part of the donor’s required minimum distributions. Therefore, those 70 ½ and older who must take required minimum distributions from an IRA and plan to make contributions to charity should strongly consider taking advantage of the ability to use their IRA as the source of making those charitable gifts this year.

For those age 70 ½ with IRA assets, make sure you take a look out this “window of opportunity” before it closes on December 31, 2011.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Tuesday, November 29, 2011


By: Barry G. Allen- President & CEO

Regretfully, there are thousands of children across the Commonwealth of Kentucky who are abused and neglected on a daily basis. They suffer 24/7 from physical, sexual and emotional abuse. We wish these tragic circumstances would go away, but they do not. In fact, they are escalating. There is evidence the Commonwealth leads the nation in the number of deaths directly related to abuse and neglect.

Fortunately, we Kentucky Baptists have a solution which includes providing these children a safe place to stay ( a refuge), in the care of people who love them and give them hope, which in turn results in healing and the opportunity to mature and live fulfilled lives as adults toward a brighter future.

Sunrise Children’s Services is the oldest Southern Baptist related children’s ministry dating back to its beginning in 1869 when the women of Louisville’s Walnut Street Baptist Church stepped out to do “more for Christ” and opened up a shelter for children left orphaned by the Civil War.

So many things have changed in the generations since then, including the kind of care most children need today. The days of orphanages are past, and we now face challenges best met through foster homes and residential programs. What hasn’t changed is the mandate for us Kentucky Baptists to provide solutions to children who continue to suffer from abuse and neglect. This is no easy task, and it can be accomplished best by cooperation. Indeed, we can do “more for Christ” together than we can alone.

How can you plug into being a part of this Christ-honoring solution? First, include President Bill Smithwick, the staff and the volunteer board members who give leadership to this vital ministry in your prayers. Second, be sure make a generous contribution through your church or directly to the Thanksgiving Offering which benefits this ministry. Third, call 855.334.2273 for information about becoming a foster parent. Finally, call Laurie Valentine or me about making Sunrise a part of your estate stewardship plan.

Thursday, November 17, 2011

Guilty of what?!

By: Barry G. Allen- President & CEO

Why is it so few Christians typically include covetousness or greed as evil and harmful desires for which we need to confess and repent in the same way we include adultery or lust? Does not the Bible teach covetousness and greed are manifestations of sin?

In the parable of the fool in Luke 12:13-21 Jesus seized the opportunity to warn us of the dangers of covetousness and greed, which literally means the desire to have more - the constant craving for more. Covetousness and greed are dangerous things, and Jesus teaches us in this parable the reasons why. In verse 15 Jesus said “…Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.” So, covetousness and greed blind us to the reality that there is more to life than things.

In the remainder of that parable Jesus tells the story of a rich farmer who spent his life accumulating things and made no preparation for eternity. The farmer’s philosophy was stated in verse 19, “…Take life easy; eat, drink and be merry.” Jesus called this person a fool. Verses 20-21 state, “But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’ This is how it will be with anyone who stores up things for himself but is not rich toward God.” Someone has said “greed is like drinking saltwater, the more you drink the thirstier you become.” So, covetousness and greed blind us to the truth about eternal things.

Jesus continued teaching his disciples in Luke 12:22-34 not to worry about tomorrow, “But seek his kingdom and these things will be given to you as well.” So, covetousness and greed make us anxious about life, rob us of the peace that comes from trusting God and blind us to the priority of our lives, which is to advance the Kingdom, not acquire wealth.

Therefore, let us confess and repent, and let us learn to exchange what we cannot keep for what we cannot lose. Amen?

Thursday, November 3, 2011

Which “Gifts” to Charity Are Deductible?

By: Laurie W. Valentine- COO and Trust Counsel

Here is a quick review of the basic rules regarding the deductibility of gifts made to charity.

First, to be deductible the transfer must be a gift to charity. At a minimum, the IRS requires what you give have a value that exceeds any benefit you receive in return. If you receive some thing or benefit when you make your gift your deduction is limited to the difference between the value of what you give and the value of what you receive.

If you receive or expect to receive a bargained-for benefit, you are not entitled to a charitable income tax deduction, no matter how the transaction is styled.

The gift must be to charity. A gift to charity earmarked by the giver for a particular individual is not deductible, if the giver’s primary intention was to benefit a particular individual, rather than advance the mission of the charity. The test for deductibility is whether the charity has full control and discretion over the gifted funds and their use. Even if the charity’s governing documents state the charity’s governing body will decide how all contributions will be used, a deduction will be denied if it is determined the charity lacked full control over a particular gift.

Gifts must be completed by December 31 to be deductible in that tax year.

Cash gifts are completed if the check is dated December 31 or earlier and delivered to the charity, or placed in the mail with appropriate postage, by December 31. Gifts of securities are completed when properly endorsed stock or bond certificates are delivered to the charity (or placed in the mail with appropriate postage), or when the securities are received into the charity’s brokerage account, or when the security is retitled on the books of the issuing company, whichever occurs first. Real estate gifts are completed when a properly executed deed is delivered to the charity.

There are percentage limitations on the amount of charitable gifts you can deduct in a single year. If the amount of your charitable gifts in one tax year exceeds the percentage limits, you are permitted to carry the unused portion of the deduction forward and use the balance over the next 5 tax years.

Contributions of services to charity and allowing a charity to use your property rent-free are not deductible “gifts”.

Tuesday, November 1, 2011

More for Christ Via Your Will

By: Barry G. Allen- President & CEO

Traditionally the month of January has been set aside by churches as “make your will” month. Since 60% of the population dies without a will, and it is estimated that 70% of the 40% who have a will do not have a currently updated will, the “make your will” month emphasis is a worthy one indeed.

Since the scriptures clearly reveal everything we possess, regardless of how much, is from God, and He has entrusted it to us to use wisely and for His purposes; and since how we plan our estates likely will be the single most significant act of stewardship we shall ever perform, it is, vitally important to use the best resources available to you in this process. The Kentucky Baptist Foundation is one of those resources, and specifically our estate stewardship consultation service. I encourage you to set aside some time between now and January prayerfully to consider a “more for Christ” provision in your estate plan. Perhaps you should consider a tithe or more of your estate to advance Christ’s Kingdom in the future through your church and other Christian ministries in which you are involved. Offering plate gifts alone will not be sufficient. A “more for Christ” provision in your estate plan offers you the opportunity to make a lasting difference for the cause of Christ beyond your lifetime. A “more for Christ” provision could be in the form of a bequest provision in your will or trust, or a beneficiary designation of retirement plan assets or a life insurance policy. You may be in a circumstance where it would be more desirable beneficial to you to go ahead now and make a “more for Christ” legacy gift rather than defer it through a provision at death. We stand ready to provide you information about all of the “more for Christ” giving ideas and their benefits.

Also, I encourage pastors and stewardship leaders to use January 2012 as “make your will month.” Let us assist you with ideas for bulletin inserts, websites and newsletter as well as our stewardship education seminars.