Did you know the University of Delaware has a charitable gift annuity program? A charitable gift annuity (CGA) is a simple contract between you and UD promising to pay you a fixed amount of money each year for life in exchange for a gift of $25,000 or more. When the gift matures, the remaining balance funds your favorite program at UD.

Charitable gift annuities have been growing in popularity, particularly among donors who already have at least one CGA with UD.

The expected payments depend upon the amount of your gift and your age at the time of your gift and will not change for the rest of your lifetime. UD invests and manages your contribution, and your payments are backed by the financial resources of the university. Some or all of the payments you receive each year are taxed as ordinary income.

A qualified charitable distribution (QCD), also called a “charitable rollover”, is a contribution made directly to the University of Delaware from your IRA. It’s another great way to direct your philanthropy to your favorite UD program, and it may be beneficial to your tax strategies. Unlike other distributions from your retirement accounts, you pay no income tax on a QCD, although there is no charitable deduction for your contribution. Plus, for those 73 and older, a QCD counts toward your required minimum distribution (RMD) from your individual retirement account without creating taxable income for you.

Donors 70½ and older can now receive income for life with a contribution to UD from their IRA account, combining a CGA and a QCD. There are some limitations:

• You can exercise this option only once during your lifetime.

• There is an aggregate limit of $53,000 for 2024.

• The entire payment you receive from your charitable gift annuity will be subject to income tax.

• You can include your spouse as a recipient of the annuity payment.

• There is no income tax deduction for this contribution, although there is no tax on the QCD either.

Example:

Consider Alan, a 75-year-old who would like to make a special contribution to support the University of Delaware. Alan has substantial assets in his IRA, and he knows that he is facing an RMD this year. Even though he doesn’t really need the income, Alan knows that his RMD is going to increase his income tax. Instead, Alan chooses to make a $53,000 QCD to the University of Delaware in exchange for a charitable gift annuity which will pay him $3,710 (7%) per year for the rest of his lifetime. Alan understands that he is allowed to make this election only one time, but he is looking forward to securing a stream of payments for his lifetime while reducing his RMD and making a generous contribution to the University of Delaware. 

Why consider a charitable gift annuity in 2024?

• You lock in gift annuity payments for life without concerns about market fluctuations.

• If you already have a gift annuity, the new rates may make this a good time to consider adding to your life income portfolio.

• If you don’t need income now, deferring your annuity payment increases these rates. (A 70-year-old deferring payments to age 75 is entitled to 8.7% annuity for life!)

If you would like more information or are interested in a personalized illustration, please contact the Office of Gift Planning at giftplanning@udel.edu or 302-831-3822. You can also use our gift calculator tool to estimate distributions.

This information is for educational purposes. Consult with a professional advisor to determine the best giving and tax strategies for your personal situation.