With the passing of the Secure 2.0 Act of 2022, Congress approved, among other provisions, the opportunity for individuals to transfer a one-time distribution up to $50,000 from an individual retirement account (IRA) to fund a charitable gift annuity (CGA). This bill was then signed into law by President Biden on December 29 of last year.
Here is how CGAs work: A donor makes a charitable donation to the JCF and, in return, receives income for life, along with additional benefits for the charitable gift. Individuals who maintain an IRA and are aged 70 1/2 or up can initiate a qualified charitable distribution while avoiding income tax on the transaction. This contribution also counts toward the required minimum distribution (RMD) of the donor’s IRA. Current rates (as of October 9, based on guidance from the American Council on Gift Annuities) provided by the JCF start at 5.9% for single life CGAs for individuals at age 70 and increase to 9.7% for donors 90 or older. Rates are subject to change.
After the lifetime of the donor, the balance of the charitable contribution that has not been distributed in income would ultimately establish an endowment fund in the donor’s name. The endowment fund, in turn, can benefit the JCF, which supports the South Jersey Jewish community via JCF Grants to nonprofits for new and innovative programs and services, financial scholarship awards to local scholars, and more, or another qualified 501(c)(3) charitable organization.
Donors should consult with their trusted advisors to determine the outcome and tax benefits of their gift; the JCF does not provide estate, financial, or tax advice.
To learn more or for questions about how you can help the community and earn income with a CGA, please contact JCF Director David Snyder at 856-673-2571 or dsnyder@jfedsnj.org.
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