Member Survey

IRA Qualified Charitable Distribution

The Consolidated Appropriations Act of 2023 went into effect on January 1, 2023. Contained in the provisions of the Act is the new Secure Act 2.0, which addresses many issues related to retirement planning. It includes provisions relevant to making qualified charitable distributions, or QCDs, from your traditional IRA, and also creates two new important charitable giving opportunities.

Starting in 2023, the Secure Act 2.0 raises the age for required minimum distributions (RMDs) to age 73 for individuals born between 1951 and 1959 and age 75 for those born in 1960 or later.

Important points to consider about making a QCD:

  1. First, a QCD is not included in your income. Your QCD is always a tax-free gift. This could be advantageous when you compare the option of giving cash you’ve already counted toward your income, and taking a tax deduction. Your income level would be higher, possibly increasing your tax bracket.
  2. Making a QCD will reduce the balance in your IRA. At age 73 or older, your RMD is based on the balance in your IRA at the end of each year multiplied by a factor published by the IRS. You may be in a position where you don’t want or need the income from your IRA. Higher income can increase your Medicare premiums and create other tax issues.
  3. The SECURE Act of 2019 eliminated the stretch IRA for many beneficiaries. With a few exceptions, children and other non-spouses who are more than 10 years younger than you can no longer stretch their withdrawals from an IRA they inherit from you over their life expectancy. Instead, they must withdraw and pay income tax on all funds within 10 years. This change means that it may be most tax efficient for you to support Population Connection by making QCDs during your lifetime and provide for your heirs by setting aside other assets.

Please be sure to consult with your own accountant or financial advisor to obtain the best tax advice specific to your own circumstances.

To qualify for a special Tax-Free IRA Qualified Charitable Distribution (QCD) to Population Connection, please make sure:

  • You will be at least 70 ½ years of age on the date of your gift.
  • Your giving does not exceed a total of $105,000 per donor per year.
  • You are giving from a traditional IRA or ROTH IRA and NOT from any other type of retirement plan (such as 401(k), 403(b), 457, Keogh, ESOP, etc.).
  • Gifts must go directly from your IRA to Population Connection.
  • You cannot receive a benefit in return for your gift.

A sample letter of instruction for the charitable distribution and an IRA QCD form are provided below for you to mail to us.  For more information, please contact Victoria Wright at vwright@popconnect.org (202)974-7756.

 

Download IRA QCD Form Here

 

The Secure Act 2.0 also establishes a NEW QCD for rollover to Life Income Plans. This new type of QCD is a one-time maximum transfer of $50,000 to a qualified charitable remainder unitrust or annuity trust, or in exchange with a charity such as Population Connection for a Charitable Gift Annuity (CGA). This new QCD can only be done once during your life time.

Other important rules apply to the new QCD for life income plans as they pertain to setting up a CGA:

    • You will be at least 70 ½ years of age on the date of your gift.
    • Your giving does not exceed a total of $50,000 in the year your establish the life income plan.
    • Only you, as the IRA owner and/or your spouse may receive payments from the CGA funded by the new QCD. No payments are allowed to children or others.
    • Spouses can each contribute up to $50,000 from their respective IRAs for one joint-life CGA.
    • The Secure Act 2.0 prohibits the new QCD for deferred payment CGAs. And CGAs funded by the QCD must be non-assignable.

For more information about using the new QCD to establish a CGA, please contact Shauna Scherer at sscherer@popconnect.org (202)974-7730. You can also learn more general information about establishing a CGA with Population Connection HERE.