President Biden recently signed into law the Secure 2.0 Act of 2022. The Act contains, in part, an expansion of the rules for qualified charitable distributions. A qualified charitable distribution (“QCD”) is a direct transfer of funds from an individual retirement account to a qualified charity.
Two of the highlights, which are effective for the 2023 tax year:
Increase in QCD limit: Under current law, individuals who are 70½ years old or older may use a QCD to donate up to $100,000 to qualified charities directly from an IRA. The Act indicates that the annual QCD limit of $100,000 will be indexed for inflation, effective for tax years after 2023.
Expanded Use of QCD: The Act includes a one-time election for a QCD to fund one of either a charitable remainder unitrust, a charitable remainder annuity trust or a charitable gift annuity. Charitable remainder trusts and charitable gift annuities are vehicles defined by federal tax law that allow you to provide payments to yourself or others while making a generous gift to charity. The limitation under the Act to fund one of these vehicles is $50,000, indexed for inflation. The QCD continues to be ineligible to fund donor advised funds, private foundations, or supporting organizations.
We at Partridge Snow & Hahn have a multifaceted Charitable & Nonprofit Organizations Practice Group to guide you through the advice necessary to discuss charitable giving options.