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New Opportunity: Create a Gift Annuity Using Your Qualified Charitable Distribution and Receive Lifetime Payments!
For many years, the charitable community has sought legislation that would treat a transfer from an IRA for a life-income plan (gift annuity, charitable remainder unitrust, charitable annuity trust) as a qualified charitable distribution (QCD). We are pleased to report that the new Legacy IRA Act is now signed into law. Folks who have attained the age of 70½ may use their qualified charitable distribution to fund an income-generating gift. Gift annuity rates are up, so the timing is perfect to consider establishing an annuity using your QCD.
Requirements for using your QCD to create a life-income plan:
- The maximum allowable transfer is $50,000. This amount limit makes a gift annuity the most likely option.
- The amount counts toward your required minimum distribution.
- The transfer can be made during one taxable year only. There are no carryovers.
- All gift annuity payments are fully taxable as ordinary income.
- There is no charitable deduction.
- The annuitants must be the donor and/or the donor’s spouse.
See the example below:
John is 75 years old and is considering a gift to Woodberry. He knows he is facing a $50,000 required minimum distribution (RMD), which will increase his income tax. Instead of receiving the funds, he instructs his IRA custodian to transfer the $50,000 QCD directly to Woodberry to establish a gift annuity. John will now receive $3,300 (6.6%) annually for his lifetime, and he has made a generous gift to the school. The process of setting up the gift annuity was simple.
For more information on how to establish a life-income plan using your QCD, please contact Dodie Chavez at 540-672-6036 or dodie_chavez@woodberry.org. |
