Secure Act 2.0 and Your Ira

The Secure Act 2.0 went into effect on January 1, 2023 and made some changes to how participants can use their IRA to make charitable gifts to non-profits.

Since 2006, IRA owners who are 70 1/2 years of age or older have been able to make charitable gifts directly from their IRA to charities like St. Paul's. This transaction is called an IRA charitable rollover or a qualified charitable distribution.

There are several advantages to an IRA charitable rollover. It allows a donor to support a mission that’s important to them without affecting their cash on hand in their checking or savings account.

In addition, when a donor gives from their IRA funds, they are giving away money that's never been taxed, completely tax-free. An IRA charitable rollover can satisfy the annual required minimum distribution (RMD), which is the amount that has to be withdrawn from the IRA each year once the participant reaches a certain age. If the donor doesn't need the distribution for personal use or they don't want it to raise their taxable income, they could donate it instead.

The Secure Act 2.0 changed a couple things when it comes to IRA charitable rollovers. First the age requirement for when the IRA owner must start to withdraw a required minimum distribution annually has gone up from 72 to 73. However, the age that an owner can start making IRA charitable rollovers has not changed and is still 70 1/2 years of age.

The Secure Act 2.0 also changed the annual limit that an IRA owner can gift to charities through an IRA charitable rollover. For 2023, the limit is $100,000 for an individual. Beginning in 2024, there will be an annual increase in the yearly limit to account for inflation.

Another big change is that donors can now use an IRA charitable rollover to set up a life income gift once during their lifetime in the amount of $50,000. A life income gift is a charitable gift annuity (CGA) or a charitable remainder trust (CRT). They are called life income gifts because they provide a regular income for the donor for the rest of their lives, and the remainder then becomes a charitable gift for St. Paul's.

St. Paul's works with trusted community partners who can set up a CGA or CRT. For more information about IRA charitable rollovers or life income gifts, please contact Dawn Hartman, Director of Strategic Giving at 724-589-4611 or dhartman@sp1867.org.