Giving After 70 and How The Secure Act Has Changed That

In late December 2022 the Consolidated Appropriation Act of 2023 was signed into law. The Missoula Community Foundation has been watching this legislation carefully because it has the potential to incentivize giving to Missoula area charities – most notably by providing tax benefits and disbursing taxable income for seniors. The Secure Act of 2022, housed in this legislation, enhances and expands the ways in which seniors can use their retirement assets to make charitable gifts. 

So here is the lowdown on the changes and a few articles we have been reading. The IRA Charitable Rollover, passed in 2006, allows taxpayers age 70½ or older to transfer up to $100,000 annually from their IRA directly to a public charity without first having to recognize the distribution as income. These transfers from an IRA to a charity are called Qualified Charitable Distributions or QCDs. 

One of the enhancements in the new legislation is that IRA holders 70½ or older are allowed to make a one time distribution to a charitable gift annuity or a CRUT. This distribution will count towards the IRA holders Required Minimum Distributions (RMD) if you are 73 or older and can help spread that taxable income over subsequent years. 

Marcy Allen, our Executive Director, met Sally Scheafer at a planned giving workshop last fall. Scheafer has been a key player in developing and moving this legislation forward, and her recent article (co-authored by Emily Horiwitz from the American Heart Association who took the lead in organizing charitable organizations to support the legislation) has some great highlights on how seniors and charities can benefit from the changes. The new legislation also indexes the existing IRA Charitable Rollover amount (currently at $100,000) starting in 2024. This will be the first inflationary increase since the legislation was passed in 2006.

As with any new legislation, there are often many questions about how it will work in real life. This recent legal analysis might be of interest to professional service providers, especially with regard to the new “Legacy IRA” provisions allowing eligible taxpayers to make a one-time QCD to a charitable remainder trust or charitable gift annuity.  

The team at the community foundation is a resource and sounding board for both donors and professional service providers. We understand the charitable side of the equation and are happy to serve as a secondary source. This post is for informational purposes only. It is not intended as legal, accounting, or financial planning advice.