In today's edition of Ask the Expert, Michael Thompson, a principal with CLA (CliftonLarsonAllen LLP), one of the leading professional service firms in the United States, will talk about an exciting new provision in the SECURE 2.0 Act that allows you to make a life income gift.
Michael specializes in working with privately held businesses and high net worth families in the accounting and tax fields. He has extensive experience in the real estate industry representing some of Atlanta's premiere commercial and residential real estate developers, management companies and investors. Michael earned his bachelor's in accounting from Berry College where he played four years on the college's tennis team. He is an active alumnus, currently serving on Berry's Board of Visitors and Planned Giving Council.
What is the new Legacy IRA QCD?
It's a special kind of qualified charitable distribution made possible by a provision in the SECURE 2.0 Act that allows people ages 70 ½ or older to make a once-in-a-lifetime distribution directly from their IRA to a life income producing charitable gift annuity (CGA). This distribution must be used in single calendar year, there is no rollover or carry forward, and it is irrevocable.
How does a QCD life
income gift work with a donor's RMD?
For 2024, QCD life income gifts can be no more than $53,000 and count toward a donor's required minimum distribution (RMD). The total of all QCD gifts - both outright and life income gifts - cannot exceed $105,000 per donor, per year. Life income gifts are considered part of that total.
Can a donor still make an outright QCD gift with funds
from their IRA?
Yes. The Legacy IRA QCD is a subset of ordinary QCDs that can be made through your IRA.
How is this new
Legacy IRA legislation beneficial?
It's helpful in a couple of ways. First, it allows you to keep your adjusted gross income down, which can impact the taxability of your social security benefits and could also limit the increase of your Medicare premiums for the following year because it is based on your modified adjusted gross income (MAGI).
Another way the new legislation is helpful is for those in retirement who are not itemizing deductions anymore. If they use money from their IRA to fund a QCD or, with this new provision, a CGA (which allows them to give to a charity and get a lifetime income), they are effectively getting a deduction because it reduces their taxable income from the top line.
Why is funding a CGA
from your IRA a smart choice?
Using your money from your IRA to fund a CGA is a good way to give a charitable gift and continue to get income benefit from it. It allows you to reduce your taxable income, give a gift, and ultimately save on overall taxes. Another plus is that you don't have to change your Will or change the beneficiary on your IRA to do this. It's a great way to solidify today a significant gift to Berry and not have to change a whole lot.
For more information contact Helen Lansing, Berry's senior planned giving officer, at 706.378.2867 or hlansing@berry.edu.
As with any gifting or tax strategy your personal
circumstances need to be considered and consulting a tax professional to
understand the potential benefits for you is highly recommended.
