IRA Charitable Opportunity – Secure Act
By Diana McKenzie
Since 2015, a law has been in place to allow individuals who are age 70½+ to make tax-free gifts of up to $100,000 annually from their IRA directly to a qualified charity or charities. The SECURE Act that went into effect on Jan. 1, 2020 added some updates. Here is information to be mindful of as you consider your charitable giving this year:
1. The IRA required minimum distribution (RMD) no longer starts at age 70½.
Note: The new law only applies to individuals who reach 70½ after 2019. If you turned 70½ in 2019 or earlier, you are unaffected and must still take the required minimum distribution from your IRA. But, if you turn 70½ in 2020 or later, you won’t need to start taking the RMD until after you turn 72.
2. The age limitation on contributing to an IRA was removed
Previously, you could not contribute to your IRA once you reached age 70½. This limit has been repealed.
3. “Stretch” inherited IRA rules changed.
Spouses can continue to stretch IRA payments over their lifetimes. However, most non-spousal beneficiaries (such as children) must withdraw the entire IRA balance by the end of 10 years.
Give from your IRA
If you are 70½+, you can still transfer any amount up to $100,000 per year directly from your IRA to a qualified nonprofit, such as South Elkhorn Christian Church, tax-free.
- You can make a difference today, allowing you to see your impact.
- The gift does not count as income, so you benefit whether you itemize on your taxes or not.
- There’s opportunity to leverage your most highly taxed assets. When IRAs are passed to loved ones, distributions from these accounts are subject to income taxes at the beneficiary’s ordinary income tax rate, which can be as high as 37%. Rather than leaving these heavily taxed assets to family, you may consider making charitable gifts from these accounts now and letting the value of other assets grow and eventually pass to loved ones.
- The opportunity only applies to IRAs. Consult your provider or financial advisor to confirm qualification and to determine if this is a good option for you.
This information is not intended as direct legal or tax advice. It is meant to raise awareness because the opportunity could be a great way for some to contribute to the South Elkhorn Endowment Fund or even make other gifts to the church. For more information, contact Diana McKenzie, President of the South Elkhorn Endowment Trustees, at 859-699-6039 or firstname.lastname@example.org