Under a new law effective in 2023, some donors over age 70 ½ can make a Qualified Charitable Distribution (QCD) from their IRA in exchange for lifetime payments through a charitable gift annuity. Here’s how it works.

Charitable Gift Annuity — A charitable gift annuity is a simple contract between you and Ocean Conservancy promising to pay you a fixed amount of money each year for life. The amount Ocean Conservancy will agree to pay you depends upon your age at the time of your gift and does not change for the rest of your lifetime. Ocean Conservancy invests and manages your contribution, and your payments are backed by the financial resources of Ocean Conservancy. 

Qualified Charitable Distribution — sometimes called a “charitable IRA rollover” — is a contribution from your IRA directly to Ocean Conservancy. You can make a QCD if you are 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. However, your QCD contribution can satisfy part or all of your Required Minimum Distributions (RMD) from your IRA without creating taxable income for you.

Charitable Rollover Gift Annuity — There are some rules and limitations:

• You can exercise this option only once during your lifetime.
• There is an aggregate limit of $53,000 for 2024.
• The entire payment you receive from your charitable gift annuity will be subject to income tax.
• The payments can only benefit you and/or your spouse.
• There is no income tax deduction for this contribution, although there is no tax on the QCD either.

Example

Consider Alan, a 75 year old who would like to make a special contribution to support Ocean Conservancy. Alan has substantial assets in his IRA, and he knows that he is facing a RMD this year. Even though he doesn’t really need the income, Alan knows that his RMD is going to increase his income tax. Instead, Alan chooses to make a $53,000 QCD to Ocean Conservancy in exchange for a charitable gift annuity which will pay him $3,710 (7%) per year for the rest of his lifetime. Alan understands that he is allowed to make this election only one time, but he is looking forward to securing a stream of payments for his lifetime while reducing his RMD and making a generous contribution to Ocean Conservancy.

Please contact Office of Planned Giving at oceanlegacy@oceanconservancy.org or call 800-519-1541 for more information. We would be happy to work with you and your advisors to help determine whether this new option is right for you.