There may be a superpower hidden in your IRA!

If you are one of the many Drexel University alumni who are taking required minimum distributions (RMDs) from your traditional IRA, you may already know about the tax-saving benefit of using your RMD to make qualified charitable distributions (QCDs) to charity.

But did you know that QCDs can now be used to make a gift to Drexel and provide you with income for life?

Thanks to legislation passed last December, IRA account holders (age 70 ½ or older) may now make a one-time QCD transfer of up to $50,000 to fund an immediate payment charitable gift annuity (CGA) that will provide you with a guaranteed source of fixed income for life. This unique opportunity does come with a few rules:

• Although the $50,000 distribution limit does not have to be made as a single charitable gift to a single charity, the gift must be completed in a single year and only once during the lifetime of the IRA owner.
• All income payments made to recipients from CGAs will be taxable.
• Income payments from two-life CGAs are limited to IRA account holders and their spouses and must be non-assignable. Spouses can each contribute up to $50,000 from their respective IRAs for separate one-life CGAs or one two-life CGA.
• Income payments must begin no later than one year from the date of funding (which disqualifies deferred CGAs).
• QCDs may not be combined with other assets to fund CGAs.

Of course, as with all QCD gifts, the amount donated will not be included in your taxable income for the calendar year in which you fund your CGA.

*assumes a 5.2% IRS discount rate

A CGA might be the right charitable giving choice for you if any of these situations apply:

• The interest rate on a CD or other fixed-income investment is low and you would like to increase your cash flow.
• You own appreciated stock or mutual fund shares, have considered selling some of the shares and reinvesting the proceeds to generate more income, but don't want to pay tax on the capital gain.
• You would like fixed payments that are unaffected by interest rates and stock prices and which you cannot outlive.
• You want to assure the continuation of payments to your spouse after your death without the delay of probate proceedings and in a tax-efficient manner.

Talk to us about the unique advantages of using a QCD to fund a CGA! Contact David Toll, senior associate vice president for gift planning, at 215.895.1882 or giftplanning@drexel.edu.