A new way to give!

Legacy IRA Act introduces a new way to give!

Beginning in 2023, those 70½ and older may elect to establish a charitable gift annuity (CGA) or a charitable remainder trust (CRT) by utilizing a qualified charitable distribution (QCD) from an individual retirement account (IRA). Both CGAs and CRTs return annual payments to the donor.

The new giving method allows for an aggregate gift of up to $50,000 in a single tax year. The gift must come directly from the IRA, the gift will count toward the annual required minimum distribution (RMD), and the gift is excluded from the donor’s taxable income.

Prior to this new legislation, QCDs could not be used to establish these kinds of gifts.

The gift must come from a qualified IRA. 401K, SEP, and other accounts are excluded.

/////

By establishing a charitable remainder trust (CRT) or a charitable gift annuity (CGA), you will provide yourself an income stream for your lifetime. Previous QCD gifts did not allow for this option.

Since the IRA asset is transferred directly to charity, donors do not report the QCD amount as taxable income and do not receive a charitable tax deduction.

While each giving vehicle offers a payment back to the donor, how that rate is determined and how those payments are taxed differs.

CGAs offer fixed-rate payments based on the age and number of annuitants. The entire CGA payment is taxed as ordinary income.

CRTs annually distribute 5% of the trust’s market value. These distributions are taxed based on how the trust earned income.

No. The new legislation limits beneficiary designations to the owner of the IRA or their spouse.

The new giving method and its limits could be applied to anyone with a qualified IRA. If each spouse has a qualified account, you could each establish a CGA or CRT.

The tax-free QCD option is only available to IRA owners. You may elect to roll over money from an account such as a 401K to an IRA to take advantage of this giving method.

Current legislation allows you to take advantage of this new opportunity only once during your lifetime.

Rates are dependent on the age of the donors and the number of annuitants. Current sample rates appear below.

One life                Two lives

71           6.0%                      5.4%

75           6.6%                      5.8%

80           7.6%                      6.5%

85           8.7%                      7.7%

Please contact us for the most accurate rate quote.

CGAs are established at a minimum of $10,000, and CRTs have a minimum gift amount of $50,000.

Thank you for your interest in supporting Purdue. To learn more, please contact the Office of Planned Giving at 765-494-8657 or plangift@purdueforlife.org.