Yes, you can fund a charitable gift annuity with an IRA. Since the SECURE 2.0 Act, an IRA owner age 70½ or older may make a one-time qualified charitable distribution that creates a gift annuity, capped at $55,000 for 2026. This page lays out who qualifies, the exact dollar cap, and how the income is taxed.
You can fund a charitable gift annuity with an IRA through a one-time SECURE 2.0 election, moving up to $55,000 for 2026 (up from $54,000 in 2025) directly from the custodian to the charity. You must be 70½ or older, the annuity must start paying within one year at 5 percent or greater, and every payment is taxed as ordinary income (Source: 26 U.S.C. § 408(d)(8)(F); IRS Notice 2025-67).
Can you fund a charitable gift annuity with an IRA?
Yes. An IRA owner age 70½ or older can fund a charitable gift annuity with a qualified charitable distribution (QCD) under the SECURE 2.0 Act, a provision often called the Legacy IRA election. The money moves directly from the custodian to the charity, the distribution is excluded from taxable income, and the annuity pays the owner (or owner and spouse) a fixed amount for life (Source: 26 U.S.C. § 408(d)(8)(F)).
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This IRA route trades the upfront deduction and partly tax-free income of a cash-funded gift annuity for a different benefit, an income exclusion on the distribution. For the income-focused planning angle, see the companion explainer on charitable gift annuities for retirement income.
How the SECURE 2.0 QCD-to-gift-annuity election works
The SECURE 2.0 Act added a one-time election that lets a QCD fund a split-interest gift, including a charitable gift annuity, instead of going outright to a charity. The custodian transfers the funds straight to the charity, which issues a fixed annuity contract in return (Source: 26 U.S.C. § 408(d)(8)(F)).
- Confirm you are age 70½ or older on the transfer date.
- Instruct the IRA custodian to send a QCD directly to the charity; you never take the money personally.
- The charity issues a gift annuity paying 5 percent or greater, with payments beginning within one year.
- Report the QCD on Form 1040 as excluded; it can count toward that year’s required minimum distribution.
- Receive fixed payments for life, each taxed fully as ordinary income.
How much can you move from an IRA to a gift annuity in 2026?
For 2026 you can move up to $55,000 from an IRA to a charitable gift annuity in a single once-in-a-lifetime election, up from $54,000 in 2025. That amount sits inside the larger annual QCD limit of $111,000 for 2026 (up from $108,000 in 2025). Both figures are inflation-indexed under IRS Notice 2025-67, and any unused portion does not carry forward.
| Limit | 2025 | 2026 | Source |
|---|---|---|---|
| One-time gift annuity (Legacy IRA) election cap | $54,000 | $55,000 | IRS Notice 2025-67 |
| Annual QCD limit (the election sits inside this) | $108,000 | $111,000 | IRS Notice 2025-67 |
| Minimum annuity payout rate | 5 percent | 5 percent | 26 U.S.C. § 408(d)(8)(F) |
| Number of times allowed | Once per lifetime | Once per lifetime | 26 U.S.C. § 408(d)(8)(F) |
Who qualifies and what are the rules?
To fund a gift annuity from an IRA you must be at least 70½, use a direct custodian-to-charity transfer, and accept a fixed contract that pays 5 percent or greater within one year. Only the IRA owner and spouse can be annuitants, and the election is available once in a lifetime with no carryforward (Source: 26 U.S.C. § 408(d)(8)(F)).
Do you have to be 70½?
Yes. You must be at least age 70½ on the date of the transfer, the same threshold that applies to all qualified charitable distributions. Reaching 70½ later in the calendar year does not qualify an earlier transfer; the age test is measured on the day the custodian moves the funds (Source: 26 U.S.C. § 408(d)(8)).
How fast must payments start, and what is the 5 percent floor?
Payments must begin no later than one year after funding, and the contract must pay a fixed rate of 5 percent or greater for life. This statutory 5 percent floor is specific to the IRA-funded version and is a detail most charity pages omit. The payments are fixed and do not adjust for inflation (Source: 26 U.S.C. § 408(d)(8)(F)).
Who can receive the payments?
Only the IRA owner, the owner’s spouse, or both together can be the annuitants on an IRA-funded gift annuity. You cannot name a child, a sibling, or any other person as an income beneficiary. This is narrower than a traditional cash-funded gift annuity, which can name other individuals (Source: 26 U.S.C. § 408(d)(8)(F)).
Is it really once in a lifetime?
Yes. The Legacy IRA election can be used only once in a lifetime, and the full $55,000 for 2026 must be committed in that single year. Any part of the cap you do not use is lost; it does not carry forward, and you cannot spread the election across two tax years (Source: 26 U.S.C. § 408(d)(8)(F); IRS Notice 2025-67).
Are payments from an IRA-funded gift annuity taxable?
Yes, fully. Every payment from an IRA-funded charitable gift annuity is taxed as ordinary income, with no tax-free return-of-principal portion. The statute directs that the funding QCD “shall not be treated as an investment in the contract for purposes of section 72(c),” so the usual annuity exclusion ratio never applies (Source: 26 U.S.C. § 408(d)(8)(F)).
Do you get a charitable deduction?
No. An IRA-funded charitable gift annuity produces no separate charitable income-tax deduction. The benefit works through exclusion instead: the QCD used to fund the annuity is left out of your gross income entirely, lowering adjusted gross income directly rather than as an itemized write-off. For a retiree taking the 2026 standard deduction of $32,200 married filing jointly, that exclusion can be worth more than an unusable deduction (Source: 26 U.S.C. § 408(d)(8); IRS Pub 590-B).
Does it count toward your RMD?
Yes. A qualified charitable distribution used to fund a gift annuity counts toward your required minimum distribution for that year, up to the amount transferred. Because the distribution is excluded from income, it can satisfy part or all of the RMD without raising adjusted gross income, the core appeal for donors already subject to RMDs (Source: IRS Pub 590-B).
The RMD age is 73 for most current retirees and rises to 75 for those born in 1960 or later, as detailed in the Q3 Advisors guide to required minimum distributions for 2026.
IRA-funded vs. traditional cash-funded charitable gift annuity
An IRA-funded gift annuity and a traditional cash-funded gift annuity share the same fixed-payment structure but differ sharply on tax treatment. The IRA version gives an income exclusion and counts toward the RMD; the cash version gives an upfront deduction and partly tax-free income (Source: IRS Pub 526, 2025; 26 U.S.C. § 408(d)(8)(F)).
| Feature | IRA-funded (QCD) gift annuity | Traditional cash-funded gift annuity |
|---|---|---|
| Funding source | Direct QCD from IRA custodian | Cash or appreciated securities |
| Upfront charitable deduction | None | Partial, based on the gift portion |
| How payments are taxed | Fully ordinary income | Partly tax-free, partly ordinary income |
| Main tax benefit | QCD excluded from income | Deduction plus tax-free income |
| Counts toward RMD | Yes | No |
| 2026 dollar cap | $55,000, once per lifetime | No statutory dollar cap |
| Permitted annuitants | Owner and/or spouse only | Owner or other individuals |
Should you use a gift annuity or a charitable remainder trust for the IRA election?
The same one-time SECURE 2.0 election can instead fund a charitable remainder annuity trust (CRAT) or unitrust (CRUT), under the identical $55,000 cap for 2026. A gift annuity is a simple contract with one charity; a charitable remainder trust is a separate trust that can hold varied assets and name multiple charities, at higher setup cost. The shared cap means the trust adds no capacity beyond $55,000 (Source: IRS Pub 526, 2025; IRS Notice 2025-67).
How this fits Roth conversion, RMD, and IRMAA planning
An IRA-funded gift annuity lowers adjusted gross income by excluding the QCD, which can create room for other tax moves in the same year. Because it reduces AGI, it can also affect Medicare IRMAA surcharges, which begin above $109,000 single or $218,000 joint MAGI in 2026 on a two-year lookback (Source: IRS Pub 590-B; Medicare.gov).
The RMD offset is where the strategies connect. Satisfying part of a required distribution through a QCD keeps that income off the return, leaving more headroom for a Roth conversion in a target bracket. Sizing that conversion, and modeling its effect on IRMAA and the net investment income tax, is the focus of the Q3 Advisors tools on how much to convert to Roth.
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Q3 Advisors is a registered investment adviser focused on retirement tax planning. This page is educational and is not advice; consult a qualified professional.
Frequently asked questions
Can you fund a charitable gift annuity with an IRA?
Yes. Under the SECURE 2.0 Act, an IRA owner age 70½ or older can fund a charitable gift annuity with a one-time qualified charitable distribution, capped at $55,000 for 2026 (up from $54,000 in 2025). The custodian sends the money straight to the charity, and the contract must pay 5 percent or greater within one year (Source: 26 U.S.C. § 408(d)(8)(F)).
How much can you transfer from an IRA to a charitable gift annuity?
For 2026 you can transfer up to $55,000 in a single once-in-a-lifetime election, up from $54,000 in 2025. That amount sits inside the larger $111,000 annual QCD limit for 2026. Any unused portion of the $55,000 does not carry forward to a later year (Source: IRS Notice 2025-67).
At what age can you fund a charitable gift annuity from an IRA?
You must be at least age 70½ on the date of the transfer, matching the general age threshold for qualified charitable distributions. Turning 70½ later in the year is not enough; the age test applies as of the day the custodian moves the funds (Source: 26 U.S.C. § 408(d)(8)).
Are charitable gift annuity payments from an IRA taxable?
Yes, fully. Every payment from an IRA-funded gift annuity is taxed as ordinary income, with no tax-free return-of-principal portion. The statute treats the QCD as not an investment in the contract under section 72(c), so the usual annuity exclusion ratio does not apply (Source: 26 U.S.C. § 408(d)(8)(F)).
Do you get a charitable deduction for an IRA-funded gift annuity?
No. An IRA-funded charitable gift annuity produces no separate charitable income-tax deduction. The tax benefit is different: the qualified charitable distribution used to fund it is excluded from your gross income, and it can count toward your required minimum distribution for the year (Source: 26 U.S.C. § 408(d)(8); IRS Pub 590-B).
Does an IRA-funded gift annuity count toward your RMD?
Yes. A QCD used to fund a gift annuity counts toward your required minimum distribution for that year, up to the amount transferred. Because the distribution is excluded from income, it can satisfy part or all of the RMD without raising adjusted gross income (Source: IRS Pub 590-B).
What are the disadvantages of a charitable gift annuity?
The main drawbacks: the gift is irrevocable, payments are fixed and do not adjust for inflation, and an IRA-funded annuity is fully taxable with no deduction. Payments depend on the charity’s general assets, and the IRA election is once in a lifetime with no carryforward of the unused $55,000 (Source: 26 U.S.C. § 408(d)(8)(F)).
Sources
26 U.S.C. § 408(d)(8), Qualified charitable distributions, https://www.law.cornell.edu/uscode/text/26/408 ·
IRS Notice 2025-67 (2026 retirement and IRA cost-of-living adjustments), https://www.irs.gov/pub/irs-drop/n-25-67.pdf ·
IRS Publication 590-B, Distributions from Individual Retirement Arrangements (2025), https://www.irs.gov/publications/p590b ·
IRS Publication 526, Charitable Contributions (2025), https://www.irs.gov/publications/p526 ·
American Council on Gift Annuities, Current Gift Annuity Rates, https://www.acga-web.org/current-gift-annuity-rates
