Once you are 73, funding a Charitable Gift Annuity (CGA) through a Qualified Charitable Distribution (QCD) from your IRA offers a unique opportunity to generate lifetime payments for yourself and/or your spouse, reduce your taxable income, and provide valuable support to HopeHealth.

What is a Charitable Gift Annuity?

A Charitable Gift Annuity is a simple contract between you and HopeHealth. In exchange for your charitable gift, HopeHealth will pay you a fixed, annual income for life. The payout rate is based on your age at the time of your gift and remains constant for your lifetime. HopeHealth will manage and invest your contribution, and payments are backed by HopeHealth's financial resources.

What is a Qualified Charitable Distribution?

A Qualified Charitable Distribution (QCD), or “charitable IRA rollover,” is a tax-free transfer directly from your traditional IRA or inherited IRA to HopeHealth. If you are at least 70½, you can make a QCD and avoid income tax on the transferred amount. While a QCD doesn’t provide a charitable deduction, it does count towards your Required Minimum Distribution (RMD) without adding to your taxable income.

What is a Required Minimum Distribution?

Once you turn 73 years old, you must take a Required Minimum Distribution from your IRA each year. You must add the amount you withdraw to your taxable income, which increases your income tax and may have other tax effects, such as increasing the cost of your Medicare insurance. The fraction of your IRA balance that you must withdraw increases each year.

Why Fund a Gift Annuity from a Qualified Charitable Distribution?

Thanks to a new law in 2023, you now have the option to fund a Charitable Gift Annuity using a Qualified Charitable Distribution (QCD).

The combination of a QCD and a Charitable Gift Annuity (CGA) allows you to make a meaningful gift to HopeHealth while receiving fixed payments for life. By using a QCD to fund a CGA once you are 73 or older, you can fulfill some or all of your Required Minimum Distribution (RMD) for the year. As a result, your gift can reduce or eliminate the tax you would otherwise owe on your RMD and provide reliable income throughout your retirement.

Key Benefits of Funding a CGA from a QCD

1. Tax-Free Distribution from Your IRA
   When you make a QCD, the amount transferred from your IRA to HopeHealth is excluded from your taxable income. This can help lower your overall tax liability for the year while satisfying your RMD requirements. Although the QCD is not tax-deductible, you avoid paying income tax on the distribution to HopeHealth.
2. Fixed Lifetime Payments
   A Charitable Gift Annuity provides fixed and dependable payments for life. Your payout rate depends on your age at the time of the gift and remains unchanged for the rest of your life, giving you a reliable source of income regardless of market conditions.
3. Support for a Cause You Care About
   Funding a CGA through a QCD allows you to support HopeHealth’s mission in a way that creates a lasting impact. After your lifetime, the remaining balance of your annuity will support HopeHealth’s goals.
4. Simplified Giving Option
   A QCD-funded CGA is easy to set up and manage. You fill out a form provided by your IRA administrator and the QCD is sent directly from your IRA to HopeHealth. You don’t need to worry about the complexities often associated with funding options like appreciated securities or real estate.

Important Considerations for QCD-Funded CGAs

• One-Time Option: Under current law, you can fund a CGA with a QCD in one year only, so it’s important to consider when this strategy aligns best with your financial and charitable goals.
• Age: You must be at least 70½.
• Contribution Limit: The maximum contribution for a QCD-funded CGA for 2026 is $55,000 per donor. This limit is adjusted for inflation each year.
• Taxable Income on Annuity Payments: While your QCD is tax-free, the payments you receive from the CGA will be taxed as ordinary income. Factor this into your financial planning.
• Payments to You and/or Your Spouse Only: You and/or your spouse may receive the annuity payments, but no one else.
• No Tax on Transfer: While you will not receive an income tax deduction when you make your gift, you also will not owe tax on the withdrawal from your IRA.
• Only Certain IRAs Qualify: Your funds must be from a traditional or inherited IRA (inactive SIMPLE IRAs and inactive SEPs are also eligible).

Consult with Your Advisors

A Charitable Gift Annuity funded with a QCD is a powerful way to secure fixed payments for life and tax benefits while supporting the values and work of HopeHealth.

Before you fund a Charitable Gift Annuity, however, we encourage you to speak with your financial and tax advisors about your plans.

Next Steps

If you’re interested in learning more about funding a CGA from a QCD, HopeHealth’s gift planning team can walk you through the process, answer questions, and help determine if this option will be the right fit for your retirement and philanthropic goals once you turn 73.

Thank you for considering a generous gift to help sustain HopeHealth.