On December 29, 2022, President Biden signed into law the Setting Every Community Up for Retirement Enhancement Act of 2022 (SECURE Act 2.0). The law builds upon the initial SECURE Act, passed in 2019, and includes dozens of new provisions aimed at helping individuals save more effectively for retirement. SECURE Act 2.0 also changes some rules governing certain charitable gifts of retirement assets.

Charitable gifts of retirement assets during life and at death remain among the most powerful and tax-wise strategies for supporting your favorite causes and charities. Here are some essential changes included in Secure 2.0 that you should know about.

  1. Increase in IRA RMD age: The required minimum distribution (RMD) age from an IRA increased to 73 on January 1, 2023, and will increase again to 75 on January 1, 2033. While this provision is not directly tied to charitable giving, it can impact your overall financial plans and potentially affect the timing and strategy of your giving. As a reminder, required minimum distribution (RMD) refers to the mandated amount a taxpayer must withdraw from qualified retirement plans, which include IRAs as well as 401(k)s and other tax-deferred retirement accounts.
  2. Increase in QCD limit: The annual per-taxpayer $100,000 QCD cap is now slated to be indexed for inflation, allowing taxpayers to give even more from their IRAs directly to charity.
  3. One-time, split-interest election: Taxpayers may now make a one-time $50,000 QCD transfer to a charitable remainder trust (CRT) or another split-interest gift, such as a charitable gift annuity (CGA). Split-interest gifts are gifts in which the donor receives a benefit during their lifetime or for a set term, with the remainder benefiting a charitable organization(s).

What charitable solution could this provide me?

Many funds at the Community Foundation are eligible to receive QCDs, including agency funds, designated funds, field-of-interest funds, and scholarship funds. Donor-advised funds, however, still do not qualify.

“Although the main focus of this new legislation is to help individuals prepare and save for a meaningful retirement, there are additional components that enhance the ability to utilize retirement accounts and other assets to strengthen non-profits like the OCF with potential tax benefits.”

Bill Forreider, OCF Board member and Investment Committee member

We are grateful for your continued dedication to supporting our community through charitable giving. Please get in touch with us by calling 989-731-0597 to discuss how to maximize your charitable gifts now and in the future.