Catholic IRA: Screening, Contribution Limits, and Rollovers

A Catholic IRA is an ordinary traditional or Roth Individual Retirement Account whose investments are filtered to exclude companies whose activities conflict with Catholic moral teaching. For 2026, you can contribute up to $7,500 across your IRAs, or $8,600 if you’re 50 or older, and direct every dollar toward funds that follow the ethical framework set by the United States Conference of Catholic Bishops.¹ Several fund families and one major ETF now exist specifically for this purpose, so building the account is more straightforward than it was a decade ago.

What Catholic Screening Actually Does to Your Portfolio

The USCCB’s Socially Responsible Investment Guidelines, approved in November 2021, were written to govern the bishops’ own portfolio but have become the working standard for Catholic fund managers.² The framework asks whether an investment protects human life, promotes dignity, acts justly, serves the common good, and cares for the environment.

In practice, Catholic funds apply that framework in three ways. Negative screening removes disqualified companies. The S&P 500 Catholic Values Index, one of the most widely tracked Catholic benchmarks, excludes companies with any involvement in abortion services or abortifacient production, contraceptive manufacturing, embryonic stem cell research or therapy, and controversial weapons including cluster munitions, anti-personnel mines, and nuclear arms. Adult entertainment producers and firms with heavy military contracting revenue are also cut. Each screen carries a defined threshold documented in the methodology.³

Positive screening runs the opposite direction, favoring companies with strong labor practices across supply chains, meaningful community development, and environmental commitments. Not every Catholic fund pushes positive screens as hard as negative ones, so the prospectus is where you confirm which approach a given fund emphasizes.

Shareholder advocacy is the piece most individual investors overlook. When your fund owns shares, its managers can vote proxies and press boards on issues like overseas human rights and political spending disclosure. You never cast those votes yourself, but the fund does it on your behalf, and its published voting record tells you how seriously it takes the role.

Where You Can Hold a Catholic IRA

Three providers dominate this space, and their approaches differ.

Ave Maria Mutual Funds is the longest-running Catholic fund family in the United States. Its lineup includes growth, value, bond, and rising dividend funds, all reviewed by a Catholic Advisory Board.⁴ These are actively managed, so expense ratios run higher than passive alternatives. The Ave Maria Growth Fund, for example, carries a gross expense ratio of 0.90%.⁵

Knights of Columbus Asset Advisors offers mutual funds, separately managed accounts, and target-date portfolios, all screened against USCCB guidelines with input from a moral theologian.⁶ The target-date portfolios shift their stock-to-bond ratio automatically as retirement approaches, which suits investors who want a single-fund solution.

The Global X S&P 500 Catholic Values ETF, ticker CATH, tracks the S&P 500 Catholic Values Index on the NASDAQ and carries a 0.29% expense ratio.⁷ Because it’s passively managed, it costs significantly less than most Catholic mutual funds. The trade-off: CATH removes excluded companies from the S&P 500 but doesn’t add positive screens for social impact.

Fees deserve honest attention. A standard S&P 500 index fund might charge 0.03% to 0.10% annually. Catholic-aligned funds charge more because moral screening adds research and compliance costs. Over a 30-year accumulation period, even a 0.50% fee difference compounds into real money. That’s the price of values alignment, and whether it’s worth paying is a personal decision worth making with open eyes.

You don’t necessarily need a specialty custodian. Most major brokerages let you hold CATH or Ave Maria funds inside a standard IRA. If you want a fully managed Catholic portfolio with theological oversight built in, Knights of Columbus handles both custody and selection.

Traditional or Roth: The Tax Question

The Catholic screening layer sits on top of a standard IRA, so you still need to choose between traditional and Roth. This decision has nothing to do with moral screens and everything to do with taxes.

A traditional IRA, governed by Section 408 of the Internal Revenue Code, lets contributions grow tax-deferred; you pay ordinary income tax on the way out.⁸ Contributions may be deductible up front, but the deduction phases out if you or your spouse is covered by a workplace retirement plan. For 2026, if you’re single and covered by a workplace plan, the deduction phases out between $81,000 and $91,000 of modified adjusted gross income. For married couples filing jointly where the contributing spouse has a workplace plan, the range is $129,000 to $149,000.¹ With no workplace plan on either side, the full deduction is available regardless of income.

A Roth IRA, governed by Section 408A, reverses the timing. Contributions go in after tax, and qualified withdrawals in retirement are entirely tax-free, both principal and growth.⁹ To qualify, the account must be open at least five tax years and you must be at least 59½, or meet another qualifying condition like disability or death. Eligibility itself phases out at higher incomes: for 2026, between $153,000 and $168,000 for single filers, and between $242,000 and $252,000 for joint filers.¹⁰

One Roth advantage rarely gets enough weight. Roth IRAs require no distributions during the owner’s lifetime.¹¹ Your Catholic-screened holdings can compound tax-free for as long as you live, which makes the Roth structure a strong estate-planning tool. Traditional IRAs force withdrawals starting at age 73, rising to 75 for anyone born in 1960 or later.¹²

2026 Contribution Limits

The combined 2026 limit across all your traditional and Roth IRAs is $7,500. Age 50 and up adds a $1,100 catch-up, bringing the ceiling to $8,600.¹ Your total contribution cannot exceed your taxable compensation for the year, so if you earned $5,000, that’s your cap regardless of the general limit.

Married couples filing jointly can each contribute the full amount to separate IRAs even if only one spouse has earned income, as long as the couple’s combined compensation covers both contributions.¹³ The spousal IRA rule matters for Catholic families where one spouse stays home with children; the working spouse’s income can fund both accounts.

Contribute too much and the IRS imposes a 6% excise tax on the excess for every year it stays in the account. Withdrawing the excess plus any earnings on it before your tax-filing deadline, including extensions, avoids the penalty.¹³

Opening the Account and Moving Money In

Opening any IRA requires your Social Security number (Patriot Act identity verification), date of birth, employment information, and beneficiary designations.¹⁴ Beneficiary forms ask for each beneficiary’s full name, date of birth, Social Security number, relationship to you, and share percentage. IRA assets pass by beneficiary designation, not by your will, so an outdated form can send your savings to the wrong person.

Fresh contributions are easy: link a bank account and transfer. Moving money from an existing 401(k) or another IRA takes more care.

Rolling Over a 401(k)

Request a direct rollover from your plan administrator. The funds move straight to the new IRA custodian without passing through your hands, with no withholding and no taxable event.¹⁵ Your new provider will typically generate a Letter of Acceptance to send to your old plan administrator.

If the distribution is paid to you instead, the plan administrator must withhold 20% for federal income tax.¹⁶ You then have 60 days to deposit the full original amount, including replacing that 20% from your own pocket, or the shortfall becomes a taxable distribution. Most people should avoid this route entirely.

Transferring From Another IRA

A direct trustee-to-trustee transfer between IRAs has no withholding, no 60-day deadline, and no cap on frequency. If funds are distributed to you instead of transferred directly, the default withholding is 10%, though you can opt out by filing Form W-4R with the distributing custodian.¹⁶ That’s a key distinction from 401(k) rollovers, where the 20% withholding is mandatory.

Withdrawals, Penalties, and RMDs

Money pulled from a traditional IRA before age 59½ is generally subject to ordinary income tax plus a 10% early withdrawal penalty.¹⁷ Roth withdrawals are more flexible: original contributions come out tax-free and penalty-free at any time since you already paid tax on that money. Earnings follow the standard early-withdrawal rules unless you meet the qualified distribution requirements.

Several exceptions waive the 10% penalty for both account types:

Total and permanent disability of the account owner.
First-time home purchase, up to $10,000 in lifetime distributions.
Higher education expenses for you or your dependents.
Unreimbursed medical expenses exceeding 7.5% of adjusted gross income.
Health insurance premiums paid after job loss.
Birth or adoption, up to $5,000 per child for qualified expenses.
A series of substantially equal periodic payments calculated using IRS-approved methods.

Even when a penalty exception applies, traditional IRA withdrawals are still taxed as ordinary income. The exception waives the extra 10%, not the underlying tax.¹⁷

Required Minimum Distributions

Traditional IRA owners must begin RMDs at age 73, or 75 for anyone born in 1960 or later under SECURE 2.0.¹² Your first RMD is due by April 1 of the year after you reach the applicable age; every subsequent one is due by December 31.¹⁸ Missing an RMD triggers steep penalties, so mark the calendar.

Roth IRAs require no distributions during the owner’s lifetime.¹¹ For Catholic investors who don’t need the income and want to leave a values-aligned portfolio to their heirs, this feature makes Roth structures especially useful. Beneficiaries who inherit a Roth face their own distribution requirements, but the withdrawals stay tax-free as long as the five-year holding period was met before the owner’s death.

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
2
United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines 2021 for the United States Conference of Catholic Bishops
3
S&P Dow Jones Indices. S&P Catholic Values Indices Methodology
4
Ave Maria Mutual Funds. Ave Maria Mutual Funds
5
Ave Maria Mutual Funds. Growth Fund
6
Knights of Columbus. Invest with Integrity
7
S&P Dow Jones Indices. S&P 500 Catholic Values Index
8
Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
9
Office of the Law Revision Counsel. 26 U.S. Code 408A – Roth IRAs
10
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted
11
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
12
Congress.gov. Required Minimum Distribution (RMD) Rules for Original Owners
13
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
14
U.S. Department of the Treasury. Treasury and Federal Financial Regulators Issue Patriot Act Regulations on Customer Identification
15
Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans
16
Internal Revenue Service. Pensions and Annuity Withholding
17
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
18
Internal Revenue Service. Retirement Topics – Required Minimum Distributions