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Start the Year by Making a Tax-Smart Gift Using Your IRA

Learn How the Legacy IRA Act Can Help You Receive Income for Life and Make a Gift to Georgetown

Just like Bill Licamele (C’68, M’72, R’74, W’76), if you are 70½ and older, you can direct up to $100,000 each calendar year to charity from a qualified IRA using a Qualified Charitable Distribution (QCD). These distributions are income tax-free, and count toward your Required Minimum Distribution if you are 73 and older. In addition to avoiding income tax, there is the added benefit of supporting a Georgetown school or program with your gift. QCDs must be sent directly to Georgetown from your IRA administrator. In an exciting turn of events, new federal legislation will make the $100,000 amount indexed for inflation starting in 2024—and raises the age for required minimum distributions to 73 in 2023 and 75 by 2033.

The Legacy IRA Act also offers new opportunities to use a QCD to create a life income gift. These gifts pay beneficiaries

A gift that pays you back— now with higher rates!

Charitable gift annuities (CGA) are a tax-savvy way to support Georgetown and create a dependable income stream in retirement years. Creating a CGA with Georgetown allows you to provide a gift to the school or program of your choice while also receiving fixed payments for life. You may also qualify for additional tax benefits, including partially tax-free payments and a federal income tax deduction if you itemize.

CGAs can be funded with cash or appreciated securities, which can have added tax benefits including avoiding capital gains liability. In addition, you can now use up to $50,000 through an IRA QCD (tax benefits may differ) to create a CGA.

Rising interest rates have made CGAs even more attractive due to the increased payout rate (based on the age of the beneficiary). The current payout rate for an 80-year-old is 7.6% and 6.6% for a 75-year-old (based on January 2023 rates).

an income for life while also providing a gift for Georgetown in the future. Individuals can use a QCD of up to $50,000 to fund a Charitable Gift Annuity (CGA) or Charitable Remainder Trust (CRT). Although not limited to a single gift (which allows for multiple CGAs), the full $50,000 must be used within a single year, and can be done only once during the IRA owner’s lifetime.

A few details to note: QCDs must be made to a CGA or CRT funded only with IRA assets, so additional contributions cannot be made to existing CRTs. Spouses may each contribute $50,000 from separate IRAs to create a new CRT together. In addition, CGA and CRT payments are limited to the IRA owner and/or a spouse. When using a QCD to create a CGA or CRT, there is no charitable deduction because the funds were not previously subject to income tax. Other restrictions may apply.

Consider a Cha ritable Remainder Trust

A Charitable Remainder Trust (CRT) is an irrevocable trust that generates fixed or variable income for you and/ or other beneficiaries for life or a term of years, with the remainder of the trust eventually becoming a gift to Georgetown that will impact future Hoyas. A CRT is an ideal gift for those who want to take care of loved ones and leave a legacy at Georgetown.

CRTs offer an immediate tax deduction and provide income while helping with retirement, estate planning, and tax management. Using appreciated securities or real estate to fund a CRT may provide additional tax benefits. As mentioned above, the Legacy IRA Act now allows you to use a $50,000 IRA QCD to create a new CRT (tax benefits may differ).

If you are interested in learning more about making a gift using an IRA QCD, or to request a customized CGA or CRT illustration, please contact the Office of Planned Giving at 800-347-8067 or plannedgiving@georgetown.edu.

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