New and Improved Gift Opportunities in 2023
In late December 2022, Congress passed the Consolidated Appropriations Act, 2023, which was signed into law in the closing days of the year. The massive legislation included the Secure 2.0 Act of 2022, which is primarily designed to encourage retirement savings for future generations of Americans. This portion of the legislation also included a provision to expand qualified charitable distributions (QCDs) from individual retirement accounts. IRA QCDs allow tax-free gifts to charities of up to $100,000 per year. The new law allows a special one-time election to make QCDs through charitable remainder trusts and gift annuities for up to $50,000.
For more information, please contact us or your tax advisors about this new way to enjoy tax-free charitable giving.
More Good News for Gift Annuities!
Charitable gift annuity rates increased again on January 1, 2023. With interest rates rising, new higher payment rates were approved by the ACGA on November 21, 2022. The suggested maximum rate schedules became effective on January 1, 2023. Gift annuity rates are based on age. Your gift annuity rate will be determined by the rate that is within 6 months of your nearest birthday. The new rates are illustrated below.
|60 & 64||4.5%|
|65 & 67||4.8%|
|70 & 72||5.3%|
|75 & 78||6.0%|
|75 & 85||6.3%|
|78 & 82||6.5%|
|85 & 90||8.3%|
The above gift annuity rates are based on the American Council On Gift Annuities suggested rates effective January 1, 2023. This is the second suggested rate increase during the past year. Check with us for more information.
Charitable Giving Strategies to Consider
- Qualified charitable distributions (QCDs) from IRAs are advantageous for eligible individuals. Although no charitable deduction is available, the income tax that is normally owed on withdrawals is avoided. QCD rules:
- Individuals must be at least age 70½ on the date of the gift.
- QCDs can come only from IRAs, not 401(k)s or other retirement accounts.
- A maximum of $100,000 may be given annually.
- The transfer must come directly from the IRA custodian.
- QCDs can be made only to public charities, not to private foundations or donor advised funds.
- Distributions can be used to satisfy a person’s pledge.
- Life-income gifts such as charitable remainder trusts and charitable gift annuities offer several advantages to satisfy philanthropic goals. Because deductions for remainder trusts and gift annuities tend to be larger, you may be able to itemize in the year a gift is arranged. Payments from life-income gifts may be attractive to those who would normally make bequests to charity through a will or living trust—providing income tax and possibly capital gains tax savings. Remember, the new SECURE 2.0 law allows for a special election to use IRA QCDs to give through split-interest gifts.
- Making gifts of appreciated assets, such as stock or mutual funds, allows you to avoid the capital gains tax that would be due if the assets were sold, offering tax savings even if you use the standard deduction.
- Those with donor advised funds can direct gifts to public charities. You may be able to itemize by making a larger gift to a donor advised fund, from which annual gifts can be made over several years. Contributing appreciated securities to a donor advised fund provides added tax savings.