A QCD life income gift is a one-time gift of up to $53,000—indexed for inflation—for those who are 70-1/2 years old or older and would like the option of taking a distribution from their IRA and spreading the taxable income out over their lifetime rather than recognizing it in a lump sum all in one year.
Description
- Potential to spread out taxable income over lifetime payments
- Donors age 70½ and older may transfer up to $53,000 from their IRA to establish a charitable gift annuity or charitable remainder trust (CRT).
- The “one-time” election must be made in one calendar year (can be multiple gifts within same year).
- If the donor doesn’t use the full $53,000, the unused portion does not carry forward.
- The amount gifted counts towards QCD annual limit of $105,000.
- The full amount gifted may be used toward any required minimum distribution the donor may have in the year of the gift.
- All distributions from the gift annuity or charitable remainder trust will be taxed as ordinary income.
- Income must be immediate (no deferral), and payout must be at least 5%.
- Income beneficiaries are limited to the donor and/or their spouse.
- Income must be for life (no term of years).
- Income cannot be assignable (including to the charity).
- The gift annuity or CRT cannot accept gifts of other types of assets.
- Thrivent Charitable gift annuity minimum is $10,000. Charitable Remainder Annuity Trust Minimum is $50,000. Charitable Remainder Unitrust minimum is $100,000.
- Spouses could each gift $53,000 from separate IRAs to create one CRUT.
- Remainder cannot go to donor-advised fund, but it can go to a Non-advised Designated Fund, an Organizational Endowment or one of Thrivent Charitable’s collaborative funds.
Target audience
- Clients who are 70½ and older
- Want lifetime income
- Wish to make gift to charity
- Would prefer to take lump sum income taxable in one year and turn into a stream of income taxable over lifetime (single or joint)
- May prefer fixed income (from gift annuity) rather than variable income from IRA distributions
How to establish a life income gift with QCD
- Request a personalized illustration for your client using our
request form , or use ourgift calculator . - Review the illustration and disclosure documents with your client.
- Complete the
gift annuity application ,IRS Form W-9, andcreate a charitable fund , or indicate an existing organizational fund or collaborative fund they wish to benefit. Ensure all applications and forms are sent to Thrivent Charitable. - The donor must request a QCD from their plan administrator and it must be sent directly to Thrivent Charitable.
- Please notify our team when the distribution request has been made, so we can ensure it’s applied correctly to the gift annuity.
- We will apply the gift to the contract and send the donor a gift acknowledgement. (The QCD is not tax-deductible, since the donor doesn’t recognize income on the distribution).
- Ask them to
create a fund and complete and return thecharitable remainder trust application , and IRSForm W-9 .- Please do not send the QCD at this time. The gift will be made once the trust is established.
- Thrivent Charitable will draft sample trust language for donor to share with their attorney for review and signature.
- Donor can request QCD distribution from plan administrator. It should be sent to Thrivent Charitable as trustee of the CRT.
What are the tax advantages of a life income gift with a QCD?
- The amount directed to the gift annuity or CRT is not included in the donor's adjusted gross income (AGI) in the year of the gift.
- Spreading taxable income over a lifetime, versus taking required minimum distributions (RMDs) into income as a lump sum, may enable donors to avoid certain disadvantages that can come with a higher AGI, such as higher Medicare premiums, self-employment or Social Security taxes, etc.
- Making the QCD gift may reduce future RMDs.
Benefits to you, the financial advisor
Thrivent Charitable will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent.
Take the complexity out of charitable planning
We know clients’ charitable giving and tax concerns are just two parts of their larger financial plan. Thrivent Charitable provides gift planners with deep expertise, a variety of options and concierge service so you can seamlessly integrate these elements into the bigger picture and help clients reach their overall goals in line with their values.
Thrivent Career FPs: Contact a gift planner
Thrivent Advisor Network (TAN) Advisors: Contact a gift planner
We know clients’ charitable giving and tax concerns are just two parts of their larger financial plan. Thrivent Charitable provides gift planners with deep expertise, a variety of options and concierge service so you can seamlessly integrate these elements into the bigger picture and help clients reach their overall goals in line with their values.