News for Professional Advisors
Legislative Focus: Secure Act 2.0 Updated Giving Strategies
We’re always keeping our eye on legislation and emerging trends related to charitable giving. These recent legislative updates have caught our attention and we’re hopeful our insights will be helpful to you as you work with your clients.
Your clients may now make a one-time $50,000 Qualified Charitable Distribution (QCD) transfer to a Charitable Gift Annuity (CGA) or a Charitable Remainder Trust (CRT). These may be great options for some of your clients, but there are some things to keep in mind:
BIG CHANGES TO RMDs
The age at which retirement accounts must begin taking required minimum distributions (RMDs) increased to 73 on January 1, 2023.
By 2033, it’s pushed to 75.
These changes could impact timing and philanthropic strategy for your clients.
- CGA — with the $50k limit, perfect for nonprofits, but not great for building endowment: From a philanthropic strategy standpoint, we recommend these types of gifts be made directly with a local nonprofit. With this size of an annuity, it can serve as a boost to a nonprofit’s operating support, but isn’t great for building endowment.
- CRT — be aware of limitations and overhead: While the one-time QCD transfer might seem like a desirable option to establish a Charitable Remainder Trust (CRT), given the lifetime limitation and inability for the trust to receive other assets, the overhead of creating a trust in this manner is something to consider carefully.
- QCDs remain a great charitable tool. The annual $100,000 limit has been indexed for inflation and eligibility remains at age 70 ½. Keep in mind though — QCDs can’t go to your client’s donor advised fund. The Foundation has several other fund types that can receive these assets, so loop us in early in the game to discuss your client’s strategy.
- IRAs still remain a really great testamentary planned giving technique. Because they are taxed so heavily to heirs, leaving a bequest to the Community Foundation is a tax-wise strategy. We can then work with your clients to develop a tailored giving plan for their favorite charities and causes after their lifetimes. It also makes the beneficiary forms a breeze to complete.
Want to learn more about tax-smart charitable giving strategies? We’re here to help. Contact us today.