Can a QCD Fund a Charitable Gift Annuity? IRA Rules for 2026

Give From Your IRA While Receiving Income for Life

Opening Preview

Eric Fleshood: With a regular QCD, the money is going from your IRA account directly to the charity. You’ve made the gift. The charity is going to use it, and that’s it.

With this option, you’re still making a charitable gift from your IRA. It’s still going to charity, but the charitable gift annuity makes fixed payments back to you during your lifetime.

So it’s especially worth considering for someone who wants to give from an IRA but might be hesitant because they still need the income.

Introduction

Katie Brubaker: Retirement can change the questions you ask about generosity. You may still want to give significantly to ministry, but an income stream would also be helpful.

For some people, money held in an IRA creates an opportunity to do both. You can support ministry and continue receiving fixed payments for life.

In this episode, Eric and I are digging into how that works, the rules that come with it, and the kind of situation where it may be worth considering.

Welcome back to the Smarter Generosity Podcast. I’m Katie Brubaker.

Eric Fleshood: And I am Eric Fleshood.

How Charitable Gift Annuities Provide Lifetime Income

Katie Brubaker: Now, Eric, in episode 11, we spent some time talking about charitable gift annuities, what they are, how they work, and why they can be helpful for someone who wants to give generously but still needs some income for the rest of their life.

But there was one piece of that conversation we wanted to come back to because, for a lot of people moving into retirement, the question is pretty straightforward.

They’re asking, “What if I want to give more to ministry, but I still need some of that income?”

And if you’re 70½ or older and have money in an IRA, there may be another option available to you.

So, Eric, let’s start there. For the person who says, “I’d love to give more, but I still need the income,” how can a charitable gift annuity help?

Eric Fleshood: Katie, that’s really worth talking about, and I’m so glad we’re tackling this today.

A lot of people look at money they’ve saved for retirement, and they feel like they have two choices. They can either give it away or keep it because they might need the income.

Well, a charitable gift annuity can allow you to do both.

With a CGA, you’re making a charitable gift to Cru Foundation, and in exchange, Cru Foundation is making fixed payments to you, or to you and your spouse, for your lifetimes.

And after all the payments have been made to you, the remaining charitable portion becomes a gift to ministry.

So you’re making a meaningful gift while still receiving income during your lifetime. You’re really killing two birds with one stone.

Charitable Gift Annuities vs. Commercial Annuities

Katie Brubaker: Now, Eric, before we get into the IRA piece, I do want to clear something up from our last conversation.

The word “annuity” can make some people a little nervous because they’re thinking about the kinds of annuities sold by insurance companies. I’m assuming that’s what’s making them nervous.

Is a charitable gift annuity the same thing?

Eric Fleshood: No, they’re very different.

A commercial annuity is an insurance product, and one of the things it’s designed to do is reduce the risk of you outliving your money.

You’ve probably heard some financial voices criticize commercial annuities because there can be high sales commissions involved. There can be ongoing costs and transactional costs inside the annuity. For that reason, commercial annuities can draw some criticism.

I want to make clear today that a charitable gift annuity is very different.

There’s no sales commission with this. You’re not buying an insurance product from Cru Foundation. There’s no ongoing cost to you with it.

It starts with a charitable gift. You make that gift to Cru Foundation, and Cru Foundation agrees to make you fixed payments for the rest of your life.

So the purpose is very different. How it works is very different.

You’re making a charitable gift, and one of the benefits is that you continue receiving payments during your lifetime.

Directing Your Charitable Gift to Ministry

Katie Brubaker: I will also add this because I feel like if I don’t, I’ll forget to say it later.

We get the question a lot with that charitable gift: “Can I direct where it goes?”

And the answer is yes, within Cru.

What a lot of people will do is direct it toward the staff they support, one of the Cru ministries, a specific project they’ve been supporting, or multiple places within Cru.

I wanted to answer that because it’s a common question we get.

Eric Fleshood: That’s right, Katie. And just to clarify for those who may not be familiar with Cru, when we say staff support, we mean specifically gifts that support missionary work.

Using an IRA to Fund a Charitable Gift Annuity

Katie Brubaker: Right. I mentioned an IRA before, so let’s now talk about how an IRA fits into this conversation.

A lot of our partners are probably already familiar with a qualified charitable distribution, or QCD, which is when money moves directly from a traditional IRA to a charity.

What’s different about that now?

Eric Fleshood: The law now allows someone who is at least 70½ to use a QCD to fund a charitable gift annuity.

This particular opportunity can only be used once during your lifetime.

In 2026, any eligible IRA owner can use up to $55,000 from an IRA for this purpose.

And if you’re married and both spouses have an IRA and qualify, those spouses can each contribute up to $55,000 toward one joint charitable gift annuity. Together, that would be an annuity worth $110,000.

The important thing is that money has to move directly from the IRA to Cru Foundation.

That’s what a QCD is. We’ve covered that in a previous podcast episode. QCD stands for qualified charitable distribution, which means money moving directly from your IRA to charity.

So this money comes to Cru Foundation to establish that annuity.

Katie Brubaker: I feel like you covered a lot of really important things in what you just said, so I’m going to recap quickly.

Number one, you need to be at least 70½ to use that QCD you just defined. The QCD goes from a traditional IRA, so 70½ is important.

Number two, you can only do this once in your lifetime.

Number three, for this year, 2026, it can be up to $55,000.

And number four, it can be a husband and wife. If they have traditional IRAs and qualify, each spouse can contribute up to $55,000 into a joint CGA together, making it $110,000.

Those are the four points I wanted to reiterate because they’re worth repeating.

Eric Fleshood: Good summary.

How a Joint Charitable Gift Annuity Works

Katie Brubaker: All right, I’m going to ask you a scenario question.

Let’s say a husband and wife both have IRAs. They want to give, but they also know they’ll continue to need income in retirement.

You just touched on this, too. What are their options? What could they do?

Eric Fleshood: They could each direct money from their IRA to Cru Foundation and use those funds to establish one joint charitable gift annuity.

Now, because it’s a qualified charitable distribution, that transfer is not going to be included in their taxable income. That’s one of the key benefits.

If they’re already taking required minimum distributions, then the QCD will count toward that requirement for the year. That’s another key benefit.

There are some people who don’t need the income this year, but they’re forced to take it out and pay taxes on it. They can redirect it to a QCD and receive some of those benefits.

Once that happens, Cru Foundation begins making those fixed payments to them for their lifetimes.

So they’ve made a charitable gift from their IRA, and they’re also continuing to receive income from that charitable gift annuity.

Understanding the Tax Benefits and Limitations

Katie Brubaker: Right. I do want to stop on the tax piece of this for just a minute because I think this could be potentially confusing for some folks.

Usually, when we hear “charitable gift,” we think, “Okay, there’s a charitable deduction that goes along with the charitable gift.”

But that’s not exactly what happens here, right?

Eric Fleshood: That’s correct.

With a normal, standard charitable gift annuity, there is a charitable tax deduction involved.

But with the QCD option, you’re not receiving a tax deduction because you’re using untaxed money coming from your traditional IRA to fund the charitable gift annuity.

So while it doesn’t create a deduction, it also doesn’t create a taxable event.

Katie Brubaker: Right. So it sounds like it depends on how it’s funded.

There are benefits either way, whether you’re funding a charitable gift annuity with cash or stock versus with a QCD.

With cash or stock, you’re going to get a deduction for that future gift. With a QCD, the benefit is that you’re not paying tax on the QCD.

Eric Fleshood: That’s right. It’s a nontaxable transfer of pretax money.

And that’s key.

Now, one thing we also want to add, Katie, is that once the fixed payments from the charity start coming your way, that income is subject to ordinary income tax.

Katie Brubaker: Okay, and that’s another distinction.

If we’re looking at CGAs and comparing them side by side based on how they’re funded, that’s another difference between the two.

If you fund it with a QCD—so many acronyms—and you get that income stream, you’re saying that’s fully taxable.

Eric Fleshood: That’s right.

Katie Brubaker: Which is not necessarily the case if you have a charitable gift annuity funded with stock or cash.

Eric Fleshood: Right. The other annuities are typically funded with money you’ve already paid tax on, and part of the payment that comes to you from the charity is not subject to tax.

When Should You Consider This Once-in-a-Lifetime Opportunity?

Katie Brubaker: Okay. Eric, toward the beginning of this, we mentioned that you only get to do this type of gift once in a lifetime.

Does that mean somebody who’s eligible should jump on it right away?

Eric Fleshood: Not necessarily.

This is something you want to check in with your tax advisor about.

You want to look at your RMD situation. You want to think about when you need this income and whether it will help you with an unwanted required minimum distribution situation.

Payment Rules, Beneficiaries, and Payout Rates

Katie Brubaker: I think there are also some pretty specific rules about who can receive these payments. Can you walk us through that?

Eric Fleshood: The payments can only go to the IRA owner, the IRA owner’s spouse, or both of them.

So it’s a fairly narrow audience compared to other types of CGAs.

The payments also have to begin right away. You can’t set one of these up and say, “I’ll start taking the payments a few years down the road.”

Another thing is that the law requires a minimum payout rate of 5%.

Why is that important?

Well, that really has to do with your age. That’s the biggest factor driving the payout rate.

We’ll take a look at that when we run an illustration for you.

That can also be important if one spouse is younger than the other because age affects the payout calculation.

So if you’re considering a joint charitable gift annuity, that’s something we’d look at with you.

Traditional QCDs vs. QCD-Funded Charitable Gift Annuities

Katie Brubaker: Just to make sure things are clear in the minds of listeners, we’ve talked a lot about QCDs from IRAs and how those work. We’ve also talked a lot about charitable gift annuities.

Can you make the distinction between using a QCD to fund a charitable gift annuity and just making a regular QCD directly to ministry?

Eric Fleshood: Sure. That’s a fair question.

With a regular QCD, the money is going from your IRA account directly to the charity. You’ve made the gift. The charity is going to use it, and that’s it.

With this option, you’re still making a charitable gift from your IRA. It’s still going to charity, but the charitable gift annuity makes fixed payments back to you during your lifetime.

So it’s especially worth considering for someone who wants to give from an IRA but might be hesitant because they still need the income.

This could solve that.

Who Might Benefit From This Giving Option?

Katie Brubaker: Who would you say is in the ideal position to do something like this, to give from their IRA into a charitable gift annuity?

Eric Fleshood: This may recap some of the things we’ve said, but the ideal person is going to be someone who’s at least 70½, has money in an IRA, and has a desire to be generous.

That’s the starting point.

From there, maybe there’s someone who’s already giving through QCDs, but they’re looking at retirement and thinking, “I don’t know what I’m going to need 10 or 15 years from now, and I’m not comfortable simply giving this away outright.”

That’s when I’d say it’s worth having a conversation.

It doesn’t mean that a charitable gift annuity is automatically the right answer. I’m not saying that.

But we can look at your situation and help you understand what the payments would look like and whether it fits what you’re trying to accomplish and what your needs are at this point in life.

Requesting a Complimentary CGA Illustration

Katie Brubaker: If somebody is listening and they’re thinking, “Eric just described me and my situation, and this sounds really interesting,” what’s the first thing they should do?

Eric Fleshood: I would encourage you to have a quick conversation with us before you move any money.

Our team at Cru Foundation would be happy to provide a complimentary illustration.

You can see what the annuity would actually look like based on your age, the amount of the gift you’re considering, and whether the payments would be for you or for you and your spouse.

Then, if you decide to move forward, that’s when you can start figuring out how to move the money directly from your IRA to Cru Foundation.

That would be the order of events I would recommend.

You don’t want to withdraw it yourself and then write a check because that changes how the distribution is treated for tax purposes.

Let me say that again.

You don’t want to take the money out of the IRA, have it come into your possession, and then turn around and give it to charity.

Then you’re missing out on the benefit of the qualified charitable distribution.

And as always, Katie, we encourage people to involve their own tax and financial advisors before they make a decision like this.

Balancing Family Needs and Generosity

Katie Brubaker: Absolutely. And I think that’s a good place to land the conversation, too.

Because the question isn’t really just, “What can I do with my IRA?”

It’s, “How do I care for the needs of my family and still be able to be generous with what God has entrusted to me?”

Like you said at the beginning, it’s that win-win situation. And for the right person, it may give them the ability to do both.

Eric Fleshood: That’s right.

The charitable gift annuity is simply a tool, and the bigger question is what you’re trying to accomplish with the resources God has entrusted to you.

If part of that is providing income during your lifetime while also giving more to ministry, this is an option worth exploring.

Katie Brubaker: Thank you, Eric. And thank you for joining us. We’ll see you next time.

Eric Fleshood: See you, Katie.

Closing Invitation

Eric Fleshood: If this sounds like it could fit your situation, the next step is to see what a charitable gift annuity could look like for you.

Go to crufoundation.org/cga and request a complimentary CGA illustration.

Our team can prepare that illustration based on your age, the amount you’re considering, and whether the payments would be for you individually or for you and your spouse.

That gives you something concrete to review with your family and your advisors before you make a decision.

Again, please visit crufoundation.org/cga and click on “Request an Illustration.”

Thanks for listening.

The Smarter Generosity Podcast is for spiritual edification and educational purposes only. It is not intended to be legal or tax advice. Consult your professional advisors.

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This transcript has been edited for clarity and readability while preserving the original meaning of the conversation.