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What Can Happen When Collecting Proceeds from IRA Custodians: An Interview with Kimberly Jetton

Receiving notification from a donor indicating she has left your organization as a beneficiary of her retirement plan can be an incredibly joyful moment. This news is often a cause for celebration, especially when such an anticipated gift could be used for an organization’s visionary horizons.

You are happy. Your organization is happy. Moreover, your donor is happy to fund a new initiative that makes your mission become even more realized.

Fast forward to the time when the donor passes away, and your organization is notified of her passing. Upon hearing such news, you then reach out to the IRA custodian, only to discover some obstacles along the way.

I had the privilege of interviewing Kimberly Jetton, she shared a little about her experience on this matter with an account custodian. Kimberly Jetton, MNM, CFRE is the President and Executive Director of the Orange Catholic Foundation in Garden Grove, CA. Here are excerpts from that interview:

Andy: Welcome, Kimberly! I’m grateful that you’ve taken a little time with me today to share an experience you had with an IRA custodian after learning about being the beneficiary of an IRA. Can you give our readers a little backstory and then get into some of the details?

Kimberly: Thank you for having me. If you are like me, you get a bit excited when an envelope comes in the mail from a trust carrier or bank. Next to a physical check, the best news inside such an envelope is to receive a notice of an IRA or trust distribution.

Andy: Yes, though I’m guessing there is more to it?

Kimberly: Yes, when these types of gifts are realized, they come with both excitement and trepidation. While I am exuberant of the fact that one of our incredible donors has decided to leave our foundation with an estate gift, the gift is not always easy to collect. What seems to be an easy distribution can turn into an effort of both patience and diligence on the part of the charity.

Andy: How so?

Kimberly: Because the policies found among some of the custodial organizations require individuals like me to open a personal account where I must provide my social security number, as well as other personal information, to receive any charitable distribution on behalf of the nonprofit. Like many other charities, we are a 501(c)(3) nonprofit organization with a tax ID number, yet we are being treated like individual heirs inheriting an IRA.

Unfortunately, many decide that it is not worth the fight and begrudgingly supply their personal tax information to the custodian. Even when I contacted my estate attorney, I was told that sometimes we just have to supply it to get the distribution.

Andy: You mentioned that many nonprofit leaders begrudgingly surrender their personal information to these custodians. Why is that?

Kimberly: Yes, many of my colleagues, unaware of their options, end up providing private information to receive the distributions for their charities. But that does not seem right. Should professionals have to compromise such information for the sake of helping their nonprofit institutions? Unfortunately, many acquiesce. Too many nonprofits are in critical need of these distributions, so their leaders give in to the demands of these IRA custodians.

Andy: Kimberly, something tells me that you were not going to just give up and surrender your personal information. What did you do about it?

Kimberly: Well, when I recently received notification of one such IRA distribution, I decided I would see how to challenge the request for my personal information on the form. I replied to the banking representative that I would not be supplying my personal social security number, thus opening a new account, for transfer of these funds. The funds were designated to my organization, the Orange Catholic Foundation. We have a tax identification number I could provide, so I asked if I could use that.

Andy: What happened?

Kimberly: I was refused. I then asked the representative if other nonprofits had provided their Executive Director’s personal information, and he told me that some of them had.

Not one to give up easily, I provided them a copy of the Charles Schultz letter and asked that the representative send it to the bank’s legal office for review (Specimen Letters ). Then I waited.

Surprisingly, I received communication back that said my request was under review. I then heard their leadership team was approving an exception for a new account and was preparing a new form for me to complete. As I share this, I am still awaiting final approval, but I am confident that this new policy will help my fellow planned giving professionals.

Andy: That sounds promising, Kimberly!  What is the one takeaway here that you wish to emphasize?

Kimberly: I hope in sharing this experience, others will begin to push back as I have. There is no legal need for any of us to provide our personal information, though certain IRA custodians will try to mandate it. I encourage you to stand your ground and help make these positive changes for all of us.

Andy: Thank you again, Kimberly! I know there are many nonprofits that will be emboldened by your actions.

Andy Ragone

By Andy Ragone
Integrated Marketing - West Region, Crescendo Interactive, Inc.

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