With all the excitement this new year has brought us, I’m sure the newest tax legislation is one of the last things on your mind. Now that the Georgia Bulldogs solidified their rightful place as kings of college football for the second year in a row, your stress levels can now return to a more manageable level, and you can free up some headspace to nerd out on tax laws changes that may potentially affect how your donors give. If anything, the tax law changes can be used as a conversation starter for brainstorming strategic giving to the University of Georgia Foundation. I’ve compiled a straightforward and digestible summary of the SECURE Act 2.0 below:
- New Rules for Using IRA Distributions for Charitable Giving: SECURE Act 2.0 allows a one-time gift of up to $50,000 from a Traditional IRA, SEP-IRA, or SIMPLE IRA to create a Charitable Gift Annuity.
- Also, the current $100,000 limit for qualified charitable distributions (QCDs) will now be indexed for inflation beginning in 2024. The minimum QCD age continues to be 70.5 years old.
- RMD Age Goes Up to 73: Required Minimum Distributions (RMDs). RMDs are required in traditional, SEP-IRA, or SIMPLE IRAs, and qualified retirement plans. Formerly set at age 72, RMDs must start at age 73 in 2023, rising to age 75 in 2033. This new rule will not help taxpayers that have already begun to take RMD’s but it will delay the age for younger taxpayers when they must begin the RMD process
- RMD Penalties Go Down: If you fail to take your RMDs on time in 2023, it will still sting—but not as much. That penalty now drops from 50% of the RMD amount not withdrawn on schedule to 25%. That penalty will shrink to 10% for IRA holders if they withdraw the RMD amount that hadn’t been taken and submit a corrected tax return in a timely manner.
Please don’t hesitate to contact the Gift and Estate Planning team with any questions you may have about these updates.