I Made My QCD CGA, Can I Have a QLAC Now?

Some early adopters of the qualified charitable distribution (QCD) charitable gift annuity have begun to turn their attention to another opportunity to reduce their required minimum distribution: the qualified longevity annuity contract (QLAC). If, like several clients we have heard from, your organization is receiving calls from donors asking if they “can do a QLAC” with your organization, here’s a primer on this vehicle, how it can be used to reduce required minimum distributions from an IRA, why a donor might confuse it with a deferred gift annuity, and some advice on how to redirect a donor’s interest towards a flexible gift annuity.

Gift Annuity Contracts Filed with State Regulators and the Legacy IRA Act

As we’ve discussed in other blog posts, it is now possible to use a qualified charitable distribution (QCD) from an IRA to fund a charitable gift annuity (CGA). Among the specific requirements set forth in Section 307 of the Consolidated Appropriations Act, 2023 (“the Act”) is that the “income interest” of such an annuity be non-assignable. Our interpretation of the Act is that the income interest in a CGA may not be assigned to anyone, including the issuing charity. Many gift annuity agreements, including those included in PG Calc’s PGM Anywhere and Planned Giving Manager (desktop) software, provide that the annuity is non-assignable “except that it may be assigned to the charity.” That exception is specifically provided for in Reg. Sec. 1.1011-2(a)(4)(ii), which allows for ratable reporting of capital gain when a long-term capital gain asset is used to fund a CGA if the annuity is non-assignable or only assignable to the charity issuing the CGA.

Is the Legacy IRA Act the Next Big Thing?

The “Legacy IRA Act” would allow a Qualified Charitable Distribution (QCD) from an IRA to fund a split interest gift (charitable gift annuity (CGA), charitable remainder unitrust (CRUT), or charitable remainder annuity trust (CRAT)). At the time of this writing, this proposed change has been included in pending legislation that is, alas, stalled as the 117th Congress heads toward adjournment in December 2022. If the Legacy IRA Act provisions are not passed this year, there are plans to reintroduce the legislation when the new Congress convenes in January 2023. What are the chances the Legacy IRA Act will become law? And, more importantly, what should you be telling prospective donors? Before we get to those key questions, let us review the proposed Legacy IRA Act and its journey through this Congress.

Why myRA Won't Be the Next Big Thing in Gifts of Retirement Plan Assets

In his State of the Union address in January, President Obama announced his intention to make a new type of Individual Retirement Account (IRA), called a “myRA,” available to certain taxpayers.What does this mean to you in working with planned gift prospects and their advisors? MyRAs would have of the following basic characteristics: MyRAs would be created by the Treasury Department, pursuant to a presidential memorandum dated the day of the address but not actually signed until two days later, whereas existing IRAs are established under the Internal Revenue Code. At least initially, myRAs would be available only to those who work for entities that agree to offer the accounts to their employees. Employers will have some incentive to do this because they would not have to make myRA contributions,