Funding a Charitable Gift Annuity with funds from your Individual Retirement Account
New for 2024, donors at least 70 ½ years of age or older can now make a one-time election to take up to $53,000 in a year of their choice to fund a CGA.
How is a CGA funded by an IRA different from a CGA funded by cash?
- You can exercise this option only once during your lifetime.
- There is an aggregate limit of $53,000 for 2024.
- The entire payment you receive from your charitable gift annuity will be subject to income tax.
- You can include your spouse as a recipient of the annuity payment.
- There is no income tax deduction for this contribution, although there is no tax on the QCD either.
Example
Consider Alan, a 75 year old who would like to make a special contribution to support Planned Parenthood Federation of America. Alan has substantial assets in his IRA, and he knows that his RMD is going to increase his income tax. Instead, Alan chooses to make a $53,000 QCD to Planned Parenthood Federation of America in exchange for a charitable gift annuity which will pay him $3,710 (7%) per year for the rest of his lifetime. While this is a one-time election, Alan looks forward to securing payments for life and reducing his RMD by making a generous contribution to Planned Parenthood Federation of America.
Please contact Planned Parenthood Federation of America at [email protected] or call 800-806-8628 for more information. If you are interested in this “Legacy CGA” option and would like to learn more, please do not hesitate to reach out to us.