Can an IRA fund a charitable gift annuity?

The federal guidance sets a distribution limit

Federal guidance describes a one-time election to distribute up to $54,000 from an IRA to charities through a qualifying split-interest entity. The election applies to the described charitable gift annuity arrangement.

The qualifying split-interest entity is the channel named in the federal guidance for the IRA distribution. The guidance describes the election as one-time and identifies charities as the recipients through that entity.

The annuity has payment conditions

A charitable gift annuity funded through the described election must provide fixed payments that start within one year of funding. The payment rate must be 5% or greater under the federal guidance.

The distribution is described as going from the IRA to charities through a qualifying split-interest entity. The payment condition applies to the described charitable gift annuity funded by that distribution.

The transfer route and income treatment matter

Practitioners describe a QCD-funded charitable gift annuity as transferring directly from the IRA custodian to the charity, without passing through the IRA owner's possession. Practitioners also describe a one-time lifetime election for a QCD-funded charitable gift annuity, subject to other restrictions.

An article describes the IRA-to-annuity distribution as not tax-deductible and says it may count toward the donor's required minimum distribution.

Practitioners note that inflation may reduce the purchasing power of ordinary income payments. The described payment condition is fixed payments beginning within one year of funding at 5% or greater.