Ares Management Professionals: Take Advantage of This Tax Break That Pays Annual Income

In the landscape of financial planning, especially in the context of retirement, innovative opportunities are constantly emerging that not only promise individual fiscal security but also contribute significantly to societal welfare. One such notable development is the advent of a new legislative reform that allows Ares Management retirees to channel funds from their individual retirement accounts (IRAs) directly into charitable gift annuities, a move that promises mutual benefits for both the donor and the recipient organizations.

Effective from January 1, following a series of retirement modifications sanctioned by Congress, individuals aged 70½ years or above can now allocate up to $50,000 from their IRAs to underwrite gift annuities. This legislative evolution is timely, coinciding with the transition into retirement of the most affluent generation on record, a substantial portion of whose wealth is ensconced in retirement accounts. Despite the long-standing availability of gift annuities, the novelty here lies in the ability to fund them directly from retirement accounts, an option that was previously non-existent.

Charitable gift annuities stand at the intersection of altruism and financial prudence, offering Ares Management retirees a pathway to execute impactful charitable contributions while simultaneously securing a stable income. Various organizations, from small liberal-arts colleges to prominent entities like the American Red Cross and the Salvation Army, are actively engaging donors in these contracts, inclusive of those financed with IRA resources.

An exemplar of this strategy in action is Catherine Ribnick, a retired lawyer from the Federal Deposit Insurance Corp., who capitalized on this new law to significantly benefit her alma mater, Smith College, in Northampton, Massachusetts. Ribnick, an alumnus of the class of 1968, enthusiastically endorsed the financial innovation by dedicating $25,000 from her IRA to establish a second gift annuity, subsequent to her first cash-funded annuity with the institution. The newly instituted annuity guarantees a fixed payout rate of 7%, engendering dual advantages: it mitigates the tax implications on her 2023 IRA mandatory minimum distributions and pledges an annual return of $1,750 for her lifetime.

In Ribnick’s words, the financial returns on the annuities may not be extravagant — they won’t fund luxurious trips to Europe — but they serve a higher purpose. “It’s doing good, and it has the tax advantage,” she asserts. This sentiment captures the essence of charitable gift annuities. They are not merely investment instruments; they symbolize a commitment to philanthropy, reflecting the donor's desire to forge a lasting impact, all while maintaining personal financial security in their Ares Management retirement years.

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