Can an IRA Owner designate as beneficiary 1/2 of account to CGA for Adult Daughter
Owner is 70
Assume RMDs taking place at time of death
Assume adult daughter is in good health and stable
Assume 1/2 half of account goes outright to the other daughter
Can an IRA Owner designate as beneficiary 1/2 of account to charitable gift annuity for Adult Daughter
If so does the 5 or 10 year rule apply to the CGA or does this make a new “stretch”?
Is there IRD if this is possible from the CGA designation to the estate of the IRA Owner?
Is naming a CRT a better solution?
Permalink Submitted by Alan - IRA critic on Fri, 2024-11-08 22:54
Yes, if the charity is knowledgeable in this area, the IRA owner can name the charity as beneficiary of the IRA and execute a gift annuity agreement, with the charity providing for life payments to the daughter equal to the amount distributed to the charity from the IRA multiplied by the recommended ACGA gift annuity rate for a person of daughters age at the time of the owner’s death. The basis for this is PLR 2002 30018.
There would be no income taxes due for the distribution of the IRA to the CGA, but the payments from the CGA to the beneficiary would be taxable to the beneficiary. This might also provide a longer stretch than the 10 year rule.
The inherited IRA should be split into a separate account for the other daughter, so the other daughter can take RMDs over her own life expectancy.
This post was based on an article by the American Council of gift annuities (ACCA). You might google that source for the complete article. This probably will not work with a smaller charity.