Fidelity Charitable: Developing Story: Secure Act 2.0 Retirement Provisions 

Fidelity Charitable has made available for download their article, “Developing Story: Secure Act 2.0 Retirement Provisions.” The abstract and key points are as follows:

On December 29, 2022, the president signed into law the 2023 omnibus appropriations bill. The bill contains Secure Act 2.0 retirement provisions and an expansion of the rules for qualified charitable donations (QCDs). A QCD is a direct transfer of funds from an Individual Retirement Account (IRA) to a qualified charity. QCDs can be counted toward satisfying required minimum distributions (RMDs) for the year if certain rules are met.

Here are some highlights of the law, which is effective for the 2023 tax year: 

Increase in QCD limit:

Under current law, individuals who are 70½ years old or older may use a QCD to donate up to $100,000 to qualified charities directly from an IRA. Section 307 indicates that the annual IRA QCD limit of $100,000 will be indexed for inflation, effective for tax years after 2023. The bill did not indicate any change to the current QCD age and QCDs continue to be ineligible for a donation to donor-advised fund sponsors, private foundations, or supporting organizations.

Increase in IRA RMD age:

The age for required minimum distribution (RMD) from an IRA is increased to 73 effective on January 1, 2023, and again to 75 starting on January 1, 2033. (IRA owners turning age 72 in 2023 would not be required to take RMDs in 2023.)

One-time, split-interest election:

Section 307 includes a one-time election for a QCD to a split-interest entity. This indicates an ability for donors to make a QCD of up to $50,000 to fund one of either a Charitable Remainder Unitrust (CRUT), Charitable Remainder Annuity Trust (CRAT) or Charitable Gift Annuity (CGA)

Stay tuned for additional insights and implication of this bill.

Click here to view Fidelity Charitable’s summary of “Developing Story: Secure Act 2.0 Retirement Provisions”

Posted by Melissa Zheng, Associate Editor, Wealth Strategies Journal.

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