QCD Charitable Gift Annuity Subject to NIIT?
I am thinking about funding a charitable gift annuity with a QCD for $50,000. Is the charitable gift annuity payments subject to Net Investment Income Taxes(NIIT) beyond regular income taxes? On the 1099R, the code for box 7 would be F for charitable gift annuity and not D – Annuity payments from non-qualified annuities that may be subject to tax under section 1411?
Permalink Submitted by BruceM on Wed, 2024-01-17 17:15
I have limited experience with Charitable Gift Annuities, but all my past experience with them has been with large non-profit organizations such as private hospitals, museums and universities. A couple of points.A charitable gift annuity is initially funded with after tax dollars or usually highly appreciated securities gifted to the non-profit organization in exchange for life fixed annuity income, a partial initial charitable tax deduction and avoidance of capital gains on contributions. This has nothing to do with a QCD, whose distributions must be made to a 501(c)(3) charity.To my knowledge, life annuity payments are not subject to the NIIT. Investment income in excess of certain threshholds are subject to the 3.8% NIIT.
Permalink Submitted by Sue Moy on Mon, 2024-01-29 09:27
Thanks for replying to my question. Using a QCD to fund a charitable gift annuity to a 501(c)(3) charity is new from SECURE 2.0 It is only a one time option with being able to fund $53,000 from an IRA to create an charitable gift annuity in 2024.