The Securing a Strong Retirement Act of 2022 (H.R. 2954), also known as the “Secure Act 2.0,” intended to expand and encourage retirement savings recently passed by an overwhelming vote of 414-5. The Senate is expected to consider a similar version this year. This legislation builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was enacted in 2019.
Among SECURE Act 2.0’s many components is a provision that would allow taxpayers to make a one-time qualified charitable distribution of up to $50,000 from an IRA to a charitable remainder trust or charitable gift annuity. In addition, the new provision would apply inflation indexing to the qualified charitable distribution (QCD) limit (currently $100,000) for direct gifts to qualified charities. The new legislation would also incrementally increase the starting age for required minimum distributions to 73 as of the beginning of 2023, 74 in 2030, and 75 beginning in 2033.
A few important reminders about QCDs:
- A QCD is a direct transfer of funds from your client’s IRA, payable directly to a qualified charity, such as CFHZ. Amounts distributed as a QCD can be counted toward satisfying your clients required minimum distributed (RMD) for the year, up to $100,000 per individual. The QCD is excluded from your client’s taxable income.
- Although RMDs are not required until age 72 (and maybe older if the new legislation passes), your client can make a QCD beginning at age 70 1/2.
- Your client does not receive a tax deduction for a QCD – rather it reduces their income and therefore can benefit even those who do not itemize.
- A QCD may not be made to a Donor Advised Fund. A QCD can be made to any other type of fund at CFHZ, including, Designated Nonprofit, Scholarship, or Community’s Endowment.
Other Resources:
H.R.2954 – Securing a Strong Retirement Act of 2021
IRA Qualified Charitable Distributions: FAQ and ANSWERS
Retirement savers could benefit from Secure 2.0
We encourage donors to first seek the advice of their legal, financial, or tax advisors when considering a gift of non-cash assets. While our team does not offer tax advice, we stay knowledgeable on charitable giving strategies. Please contact Colleen Hill, Vice President of Development & Donor Services, at chill@cfhz.org or by calling 616–994–8853 if we can help you serve your clients.
