We start a new year with new legislation that opens the door for a different way to give. Last week President Biden signed legislation that adds a new opportunity for giving from your IRA.
For those who are at least 70.5 or older and have a Required Minimum Distribution (RMD), there is now an opportunity to make a one-time Qualified Charitable Distribution of $50,000 and use it to set up a charitable gift annuity through DSUMF. A charitable gift annuity pays income to a single donor or a donor and spouse for their lifetimes.
The Qualified Charitable Distribution lets you take the $50,000 out of your IRA without paying income tax. Then, the income is taxable as the payments come back to you over your lifetime. For many folks, spreading out their income over their lifetimes will prove to be an advantage.
Whatever is left when you are gone can go to your church or another favorite nonprofit. Many people appreciate knowing the exact amount that will come to them quarterly or annually and the fact that it is guaranteed for life.
The amount we pay is based on your age. For example, the rates below reflect the percentage of the initial amount:
Single Life Annuity
Two Life Annuity
|65 & 65||4.7|
|70 & 70||5.2|
|75 & 75||5.8|
|80 & 80||6.5|
|85 & 85||7.7|
|90 & 90||9.4|
|95+ & 95+||9.5|
A single person age 75 who uses an IRA to fund a $50,000 gift annuity would receive $3,300 a year — payable quarterly, annually, or semi-annually. That annual amount may be less than you would have to take out as an RMD.
We are always happy to answer your questions about charitable giving and how you can be wise about your philanthropy and taxes. Please let us know how we can help.
Happy New Year!