Charitable Giving with Beaufort Charities Legacy IRA

As part of new legislation called the SECURE Act 2.0, beginning in 2023 individuals over the age of 70 ½ will have the opportunity to use up to $50,000 of their qualified charitable distribution (QCD) to establish a charitable gift annuity (CGA) or a charitable remainder trust (CRT) to support charitable efforts of Beaufort Charities.

Planning is a key theme across all areas of charitable giving, especially as you plan your donations this year. Consider taking advantage of the new “Legacy IRA” rules for QCDs or consider the increased benefits of a charitable gift annuity as interest rates rise.

Here are three key provisions affecting donations in the new law:

1. Taxpayers age 70 ½ may now make a one-time $50,000 QCD transfer to a charitable remainder trust (CRT) or a charitable gift annuity (CGA).
2. The required minimum distribution (RMD) age (previously 72) increased to 73 on Jan. 1, 2023. The age will increase to 75 beginning on Jan. 1, 2033.
3. 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.
4. CGAs created to receive a QCD contribution are different from other CGAs under the new law. For example, annuity payments are fully taxable, and payments must be at least 5%.
5. In a typical transaction, a donor with an IRAs can transfer $50,000 to the Beaufort Charities and receive an immediate life annuity that will pay a 73-year-old donor $2,850 per year for his or her lifetime. A 76-year-old donor would receive $3,050 per year for his or her lifetime. Two-life CGAs pay less than the single life rate. A couple, ages 73, would receive $2,500 for the life of both beneficiaries.

Here are three provisions that have not changed:

1. 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 tax-free gift technique without the income tax hit on the distributed funds while also removing those funds from liability for future taxes.
2. Taxpayers required to take RMDs can still count QCDs toward their RMDs, thereby avoiding the usual income tax hit on RMD dollars withdrawn.
3. Transfers to donor advised funds are still not permitted.

If you would like to explore the Legacy IRA, charitable gift annuities or other gift options and receive a confidential no obligation example based on your age(s), please contact KEVIN LIVINGSTON