A new option for IRA giving

If you’re over the age 70½, Congress just made giving to charity more tax-smart and beneficial than ever before.

Included as part of the Secure 2.0 Act passed at the end of December, the “Legacy IRA” provision expands the definition of Qualified Charitable Distributions (QCDs). Now, if you are over the age of 70½, you can make a one-time distribution of up to $50,000 from your individual retirement account (IRA) into a charitable gift annuity or charitable remainder trust. Both charitable gift annuities and charitable remainder trusts are forms of “life income” gifts that provide you with guaranteed fixed annual payments for life and a very generous tax deduction, and then leave the remainder to the nonprofit of your choice. The way the legislation is crafted, the new option to create a charitable gift annuity is particularly attractive and beneficial to donors.

Just the facts

People over 70½ can now make a one-time $50,000 qualified charitable distribution from an IRA to a charitable gift annuity or charitable remainder trust.

If you’re age 73 or older, you can count this and other qualified charitable distributions toward your required minimum distribution.

“This legislation creates a fantastic opportunity to make a tax-smart gift to the Quad Cities Community Foundation with multiple benefits for you as a donor,” said Anne Calder, vice president of development. “We have the tools and the knowledge to set up gift annuities and charitable remainder trusts for the charitable fund, charity, or community you care about. And as these gift types evolve, we are always here to help walk you and your professional advisors through options to make the most of your giving.” 

Donors can now make a Legacy IRA gift of up to $50,000 to establish a charitable gift annuity, and the amount distributed will be counted toward the $100,000 QCD limit for that year. Spouses can each contribute up to $50,000 to a single charitable gift annuity. Unlike the existing QCD, the Legacy IRA distribution can only be made once in your lifetime.

The new legislation builds on existing charitable IRA rollover rules. Since 2006, IRA holders 70½ or older to have been able to make QCDs of up to $100,000 directly to charity each year, tax-free. If you are over the age of 73 (a new threshold established by the legislation, up from age 72), that QCD counts toward your annual required minimum distribution (RMD) without adding to that year’s gross adjusted income.  

Read more about the benefits of giving from your IRA early in the year.

To learn more about the new Legacy IRA provision and how to take advantage of it, contact Anne Calder at AnneCalder@QCCommunityFoundation.org or (563) 326-2840. 

Eric McDowell