If you’re not familiar with the latest variation of the individual retirement account— it wouldn’t be surprising. It’s only gone into effect this year.
ABOUT LEGACY IRAs
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- Unlike a traditional IRA, a Legacy IRA indirectly provides income to retirees through a Charitable Gift Annuity (CGA).
- A CGA is an agreement between a donor and a nonprofit organization, where the donor donates assets, and the nonprofit provides regular payments for life based on the donated assets, keeping the assets upon the donor's death.
- The Legacy IRA allows individuals over the age of 70 ½ with a traditional IRA to take up to $50,000 as a one-time Qualified Charitable Distribution (QCD) to set up a CGA.
- To utilize the Legacy IRA, individuals may need to roll over their 401k funds into an IRA.
- The annual payout from the CGA must be at least 5%.
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BENEFITS OF USING IRA FUNDS FOR A CGA:
- It allows donors to increase their giving and ensure their future giving matches their values.
- It lowers the donor’s tax liability in the year the CGA is funded by excluding the amount of the gift from taxable income
- It could satisfy all or part of a Required Minimum Distribution
- It sets up steady, lifetime payments to the donor, or “donor and spouse.”
- The minimum 5% return in annual payments is competitive with historic rates CDs and government bonds
- There is typically no cost to the donor to set up and administer the CGA. The nonprofit holding the funds will do all of that.
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WHO’S USING LEGACY IRA PROVISIONS TO SET UP CGAs?
- Folks over 70 ½ with appreciated stock or mutual fund shares who want to reinvest some of those assets to generate more income— without paying capital gains taxes.
- Those who want fixed, lifetime payments unaffected by the markets
- And those who want to ensure continued payments to a loved one without going through probate.
In the past, the inability to use pre-tax dollars to set up a Charitable Gift Annuity was a major obstacle to small donors. That obstacle is now removed
Proverbs 3:9 reminds us, “Honor the Lord with your wealth and with the firstfruits of all your produce.”
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On today’s program, Rob also answers listener questions:
- Can my son take over my cosigned car loan under his name?
- Can I refinance my car loan with a 3% interest rate to lower my monthly payments?
- Should I consider cashing in my $20,000 whole life insurance policy and investing it in a CD for potential future growth?
- Should I put my rental property in an LLC for liability protection?
RESOURCES MENTIONED:
Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network as well as American Family Radio. Visit our website at FaithFi.comwhere you can join the FaithFi Community, and give as we expand our outreach.
Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.
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