Just before the start of the New Year, Congress passed a spending bill that includes much-anticipated enhancements to Qualified Charitable Distribution rules – creating new opportunities for this popular giving strategy.

Of particular interest to attorneys, accountants and wealth managers who advise philanthropists is the bipartisan legislation referred to as “SECURE 2.0,” which builds on the original SECURE Act of 2019.  SECURE stands for “Setting Every Community Up for Retirement Enhancement” and it includes guidelines for Qualified Charitable Distributions (QCD).

Here are three new provisions affecting philanthropists:

• Taxpayers may now make a one-time $50,000 QCD transfer to a charitable remainder trust (CRT) or other split-interest gift such as a charitable gift annuity (CGA). These are the “Legacy IRA” provisions. Note that the law effectively mandates that the CGA or CRT be created solely for the purpose of receiving a QCD because the new statute requires that the vehicle contain only IRA assets.
• The Required Minimum Distribution (RMD) age (formerly 72) increased to 73 on January 1, 2023. The age will increase to 75 beginning on January 1, 2033. While this provision is not directly tied to charitable giving, it will nonetheless impact your clients’ overall financial plans and potentially affect the timing and strategy of their philanthropy. As a reminder, RMD refers to the mandated amount that a taxpayer must withdraw from qualified retirement plans, which include IRAs as well as 401(k)s and other tax-deferred retirement accounts.
• The annual per-taxpayer $100,000 QCD cap is now slated to be indexed for inflation, which will allow taxpayers to give even more from their IRAs directly to charity.

Here’s what has not changed:

• Eligibility for making a QCD still starts at 70 ½. This allows taxpayers who are not yet required to take IRA distributions under the RMD rules to still take advantage of the QCD technique without the income tax hit on the distributed funds while also removing those funds from liability for future estate taxes.
• Taxpayers required to take RMDs can still count QCDs toward their RMDs, thereby avoiding the usual income tax hit on RMD dollars.
• A QCD isn’t permitted to a private foundation or a Donor-Advised Fund. The Community Foundation offers several types of charitable funds that can be supported by a QCD, such as Unrestricted Endowed Funds, Field of Interest Funds, Designated Funds and Scholarship Funds.

We look forward to working with you and your clients to make the most of the new QCD opportunities.

To discuss ways to use QCDs or gift IRAs, contact Mark Kolter, Senior Director of Philanthropic Services, at mkolter@cfbroward.org or 954-761-9503, ext. 130.

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