Charitable Gift Annuities have long provided donors with an opportunity to support Trinity College while also providing a lifetime of payments to themselves and their beneficiaries. A charitable gift annuity (CGA) is a simple contract between you and the college, where the college promises to pay you a fixed amount of money each year for life in exchange for your charitable contribution. 
The payout is determined by your age at the time of your gift, and does not change thereafter. Once established, Trinity invests and manages your contribution, and your payments are guaranteed by the financial resources of the College. At the end of the annuity, the remaining balance of your gift is released to the college for its use. 

Now there is a new reason to consider a CGA: The Legacy IRA 

CGAs have always been attractive because of the income they generate. An equally popular way to support the college is to make gifts directly from an IRA.  A QCD – sometimes called a “charitable IRA rollover” – is a contribution from your IRA made directly to Trinity. You can make a QCD if you are at least age 70½ at the time of your gift. Because the QCD goes directly to a charitable organization, you pay no income tax on the distribution. While you don't receive an income tax charitable deduction for your contribution, the QCD counts toward your Required Minimum Distributions (RMD) from your IRA without creating taxable income for you. For donors who do not rely on their RMDs for their living expenses, the QCD has become a popular and tax-wise way to support Trinity.
At the end of 2022, legislation was passed offering donors a special opportunity. The Legacy IRA Act allows individuals to make a one-time, income tax-free Qualified Charitable Distribution (QCD) from an IRA in exchange for a life income gift. Now, under certain circumstances, these two gift plans can be combined for a tax-efficient way to support Trinity.

A few important rules and limitations:

Under the new law donors can make a Qualified Charitable Distribution in exchange for a charitable gift annuity with the following caveats:

  • You can exercise this option only once during your lifetime.
  • There is an aggregate limit of $50,000.
  • The entire payment you receive from your charitable gift annuity will be subject to income tax. (Income from CGAs funded through traditional sources are taxed differently, and a portion may be tax-free.)
  • You can include your spouse as a recipient of the annuity payment.
  • Like a regular QCD, there is no income tax deduction for this contribution; because the QCD counts toward your RMD but does not increase your adjusted gross income (AGI), there is in effect a tax savings. 
     

Case Study 

Consider Alan, a 75-year-old who would like to support Trinity. Alan has substantial assets in his IRA, and he knows that his RMD exceeds his income needs. Alan also knows that his RMD will increase his income tax, since it will be included in his adjusted gross income. Instead, Alan chooses to make a $50,000 Qualified Charitable Distribution to Trinity in exchange for a charitable gift annuity which will pay him $3,300 (6.6%) per year for the rest of his lifetime. The gift will satisfy his RMD without increasing his AGI, and advances Trinity's mission "to prepare students to be bold, independent thinkers who lead transformative lives." 

Please contact Senior Director of Leadership and Planned Giving Beth Cahill at 860-297-5315 or elizabeth.cahill@trincoll.edu for more information. We would be happy to work with you and your advisors to help determine whether this new option is right for you.