Anyone using CGAs (Charitable Gift Annuities)?

[nwsteve]

Just received a mailing from my former University to introduce their CGA offerings. This "opportunity" originates from 2022 Federal legislation that allows you to transfer up to 50k to a CGA. Transfers qualify as a RMD distribution and you will pay ordinary income on the annuity payment. You do have to be 70.5+. Currently my university is paying a 70 yo 6% annuity while a 76 yo gets 6.8% and an 80 yo 7.6%. These are life time annuities with any residuals going to the University. You can only do ONE transfer.
Found this article https://www.forbes.com/sites/alanga...ome-tax-deferral-opportunity/?sh=48645a306c96

Looks like a lot of work and complexity.

All input and experience much appreciated

 

[pjm-7]

Charitable Gift Annuities have been around for a long time. The recent tax law change is just a sweetener for people to donate, just like the qualified charitable donation (QCD) that has been around for about twenty years. The big thing to consider is would you make and can you afford to make the donation to the charity without the small tax incentive. Is the charity that important to you? Are you restricting money that you may need later? Remember, don't let taxes wag the dog.

 

[jj]

I have considered this for some of our IRAs but decided that it's too final.

Donating the RMD each year with QCDs is a decision that can be made each and every year.

The current plan is that a substantial amount will be QCDs but if circumstances change that can be reconsidered.

 

[qwerty3656]

One thing we did was setup a donor advisor fund which allows you to do things like contribute appreciated stock and get the tax deduction, but decide later how it is distributed (so we made some bigger donations and are slowly distributing the money to charities over time).

When we die, my plan was to have my kids take over controlling the fund (although, I guess I haven't looking into whether there are any issues with that)

 

[RunningBum]

One thing we did was setup a donor advisor fund which allows you to do things like contribute appreciated stock and get the tax deduction, but decide later how it is distributed (so we made some bigger donations and are slowly distributing the money to charities over time).

When we die, my plan was to have my kids take over controlling the fund (although, I guess I haven't looking into whether there are any issues with that)

https://www.fidelitycharitable.org/giving-account-guide/successor-options.html are your options if your DAF is at Fidelity. I'm guessing most other places have similar options.

I suppose a disadvantage to letting your kids control the fund once you pass would be if you have very different targets for charitable giving. You might instead just name a charity to receive the bulk of the holdings if you disagree with where they would give grants. But I named my son as successor to mine. Why not let him pick the charities for the world he's still living in?

 

[qwerty3656]

https://www.fidelitycharitable.org/giving-account-guide/successor-options.html are your options if your DAF is at Fidelity. I'm guessing most other places have similar options.

Cool - our DAF is at Fidelity, so I will update the info there.

 

[OldShooter]

... Looks like a lot of work and complexity. ...

From my Adult Ed investing course: "Rule of Thumb: The more complicated an investment product is, the more likely it is that it was designed to make money for the seller, not to make money for you."

Using this screen saves me a lot of time. Maybe it causes me to miss an opportunity once in a while, but I'm OK with that.