You may already know about a qualified charitable distribution or charitable gift annuity, but did you know you can also fund a life income gift with your IRA? A new law allows donors to make a qualified charitable distribution from their IRA account to the LA Phil in exchange for a charitable gift annuity and receive a lifetime of payments as a result. 

A qualified charitable distribution (QCD) – sometimes called a “charitable rollover” – is a contribution from your IRA directly to the LA Phil. You must be at least age 70½ at the time of your gift. Unlike other distributions from your retirement accounts, you pay no income tax on a QCD, although there is no charitable deduction for your contribution. If you are 73, a QCD counts toward your required minimum distributions (RMD) without creating taxable income for you.

A charitable gift annuity (CGA) is a simple agreement between you and the LA Phil promising to make payments of a fixed amount to you for life in exchange for your contribution today. Gift annuities are easy to set up and the payments you receive are backed by the general resources of the LA Phil. You can reserve lifetime payments for yourself or someone else, and you can name one or two recipients. Even better, you receive an income tax deduction for the value of your charitable contribution. 

New Opportunity 

The new law allows you to make a QCD in exchange for a charitable gift annuity (CGA). As a result, you can make a tax-free rollover from your IRA and receive a lifetime of fixed payments in return. There are some rules and limitations: 

  • you can exercise this option only once in your lifetime;
  • there is a limit of $50,000;
  • the entire payment you receive from your CGA will be subject to income tax.
  • There is no income tax deduction for this contribution, although there is no tax on the QCD either.

This is an opportunity to turn some of your IRA into a lifetime stream of income without paying income tax. And, if you are concerned about RMDs, this contribution will reduce the amount of income tax you will have to pay.

Please contact the LA Phil Office of Gift Planning for more information. We would be happy to work with you and your advisors to help determine how your charitable gift can benefit the LA Phil and provide you with income.