Law update provides excellent giving opportunity

As part of the 2023 Secure Act 2.0, Congress gave individuals ages 70 and a half years and older a fantastic opportunity to create lifelong income via a Charitable Gift Annuity.

Individuals may give up to $50,000 in a Qualified Charitable Distribution from their IRA to create the annuity. Up to $100,000 may be given by couples who combine their qualified distribution to create a two-life annuity.

As a reminder, a Qualified Charitable Distribution is a gift made by someone 70 and a half years and older from a traditional IRA to a qualified 501(c)(3) charity such as the Catholic Foundation of Oklahoma. The QCD may satisfy all or part of the Required Minimum Distribution mandated for those 73 years old or older.

The new legislation allows you to use a QCD to create a Charitable Gift Annuity. While still counting toward the Required Minimum Distribution, the QCD-funded Charitable Gift Annuity will provide you income for life. Rather than being taxed on the required distribution, you can still receive income, but over the rest of your lifetime.

The limit on the new QCD-created Charitable Gift Annuity is $50,000 per person and is available in one tax year only. The amount counts toward the $100,000 annual limit for Qualified Charitable Distributions, and toward your Required Minimum Distributions for those 73 years old or older. There is no charitable gift income tax deduction for QCDs, but you also avoid income tax on those transfers. All gift annuity payments will be taxed as ordinary income.

After your lifetime, any annuity residuals will be transferred to the Catholic Foundation of Oklahoma Endowment for future support for parishes and other ministries in the Archdiocese of Oklahoma City.
Example: A 75-year-old makes a $50,000 Qualified Charitable Distribution from her IRA to create a Charitable Gift Annuity at the Catholic Foundation of Oklahoma. No withdrawal penalty or income tax is assessed, and no charitable deduction applies. She could expect a 6.6% payout rate for the rest of her life. The annual income of $3,300 is subject to ordinary income tax. 

For more information, or to receive a personal illustration, visit cfogift.org or call the Catholic Foundation at (405) 721-4115.

Peter L. de Keratry is the executive director of the Catholic Foundation of Oklahoma and the Secretariat for Stewardship and Development for the Archdiocese of Oklahoma City.