Your IRA is More than Just a Retirement Account

If you are among the many Drexel University alumni who are taking required minimum distributions (RMDs) from your traditional IRA, you may already know that using your RMD to make qualified charitable distributions (QCDs) is tax-smart. The amount of your QCD is excluded from your adjusted gross income (AGI) for the year, which can reduce taxes on Social Security benefits, lower Medicare premiums, and satisfy your RMD — all without increasing your tax bracket.

But there’s more: A QCD can now be used to make a gift that supports Drexel and provides you with income for life.

IRA account holders (age 70 ½ or older) may make a one-time QCD transfer of up to $55,000 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 comes with a few rules:

• Although the $55,000 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.
• Spouses can each contribute up to $55,000 from their respective IRAs for separate one-life CGAs or one two-life CGA. Income payments from two-life CGAs are limited to IRA account holders and their spouses and must be non-assignable.
• All income payments made to recipients from CGAs will be taxable.
• 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.

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 4.6% IRS discount rate.

Talk to us about the unique advantages of using a QCD to fund a CGA! To learn more, Contact David Toll, JD, senior associate vice president in Drexel University’s Office of Gift Planning, at 215.895.1882 or giftplanning@drexel.edu.