Legacy IRA Act Provides New Gift Planning Opportunities

Charitable Tax Strategies

New charitable tax law offers gift planning opportunity that provides income for life while making donation to charity.

Beginning in 2023, the Legacy IRA Act further encourages charitable giving by allowing donors age 70½ or older to make a one-time, $50,000 qualified charitable distribution (QCD) directly from an IRA in exchange for a charitable gift annuity (CGA).

A few details about the new QCD opportunity:

  • It qualifies toward required minimum distribution (RMD).
  • Spouses may each contribute $50,000 from separate IRAs to establish a CGA.
  • CGA payments are fully taxable – this is not typical.
  • CGA payout rate for an 80-year-old is 7.6% or for a 75-year-old is 6.6% (based on February 2023 rates).
A man and women sitting at a table and filling out paperwork.

Other changes for regular IRA QCD gifts to charity under the Legacy IRA Act:

  • Current $100,000 annual limit to be indexed for inflation beginning in 2024.
  • Age for RMDs will increase from 72 to 73 in 2023 and will move to age 75 by 2033.

Rising interest rates have made CGAs even more attractive due to the increased payout rate (based on age of beneficiary and other factors).