Using QCD’s to fund a Charitable Gift Annuity

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Are you considering making a gift to a charity or perhaps your Alma Mater? Consider using pre-tax IRA dollars to create a Charitable Gift Annuity.  If you are 70 ½ or older, you can make a Qualified Charitable Distribution or QCD straight from your IRA.  This distribution counts toward your required minimum distribution but is not taxable to you, even if you take the standard deduction on your income tax return.  The maximum amount is $100,000 each year for each IRA holder.  The distribution must be made directly to the charitable organization.

You can also do a one-time QCD of up to $50,000 to fund a charitable gift annuity (CGA).

I recently saw the following and thought many of you might have seen similar advertisements.

Charitable Gift Annuity Real-Life Example

Alan is a 75-year old who would like to make a special contribution to

support the American Red Cross. Alan has an IRA and knows that he is facing a

required minimum distribution (RMD) this year. Alan knows that his RMD is

going to increase his income tax. Instead of withdrawing the funds from his IRA,

Alan instructs his IRA custodian to make a $50,000 QCD directly to the American

Red Cross in exchange for a charitable gift annuity which will pay him $3,300

(6.6%) per year for the rest of his lifetime. Alan understands that he is allowed to

make this election only one time, but he is looking forward to securing a stream of

payments for his lifetime, meeting or reducing his RMD for the year and making a

generous contribution to the American Red Cross.

Gifts to Your Non-Profit

Basically, this concept allows you to make a gift to your charity or perhaps your alma mater, directly from your IRA, count this as part of your RMD and not be taxed on it.  Then you get a series of payments perhaps for the rest of your life.

There are many other rules we did not discuss, but I love this concept.  We’ve included a free guide, “Qualified Charitable Distributions Basic Rules” which you can download by clicking the download Guide button below. Call us at 940-464-4104 or set up a 15-minute no-obligation virtual meeting with me to discuss this further!

At RFG Wealth Advisory we’re committed to putting your interests first and maintaining a transparent fee structure, ensuring your financial peace of mind. Call us today!



Qualified Charitable Distribution Basic Rules

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