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IRA to Charitable Gift Annuity Rollover

IRA to Charitable Gift Annuity Rollover

The Secure Act 2.0 enhances and facilitates the retirement benefits of many Americans with changes that increase the required minimum distribution age and allow a larger catch-up contribution. Also new is permission for a one-time transfer of up to $50,000 to establish a charitable gift annuity.

Section 307 of the Secure 2.0 Act allows a one-time rollover of $50,000 from an IRA to a life income plan. This provision amends Internal Revenue Code Section 408(d)(8) and creates a limited one-time IRA rollover into certain qualified life income plans. This qualified charitable distribution (QCD) of up to $50,000 is permitted on or after January 1, 2023.

The $50,000 IRA distribution may be to a non-assignable charitable remainder annuity trust (CRAT), standard payout charitable remainder unitrust (CRUT) or immediate charitable gift annuity (CGA). A net income plus makeup unitrust or a deferred payment gift annuity are not qualified charitable entities. The CRUT or CRAT must be funded with only QCDs. There can be no additions of other assets.

The distribution must be to a charitable remainder trust with the remainder interest distributed to an exempt nonprofit. For a charitable gift annuity, it must have a 5% or higher payout rate and be qualified under Section 501(m)(5)(B). Some two life gift annuities with the IRA owner over age 70½ and a spouse under age 62 may need to increase the payout from the ACGA recommended rate to 5% in order to qualify. If charities have filed the ACGA rates or a fixed rate schedule in New York, California or other regulated states, this selective increase in payout rate may not be permitted by the state insurance commissioner.


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