New tax laws impact retirement accounts, saving and giving

2023 has brought new tax laws and other changes that may affect donors' giving decisions. And with any economic change, donors may be looking at their finances and wondering how they will be impacted. The new laws include retirement changes, known collectively as "Secure 2.0," that may affect saving and giving. Below are three important takeaways.

Increases the required minimum distribution (RMD) age for an individual retirement account (IRA).
The new law increases the age retirees must begin taking taxable withdrawals to 73 in 2023 and 75 by 2033, up from the previous 72. It does not, however, increase the age when an IRA owner can take a qualified charitable distribution directly to a qualified charity. That age remains at 70½.

How does this affect donors?
Simply put, the extension of the RMD age allows for more time to save while enjoying additional tax-free growth. It also can be significant if donors do not want to begin withdrawing retirement funds during an unsettled economic climate, giving them more time for their stock portfolio to recover.
Adjusts for inflation the $100,000 annual limit on direct gifts to qualified charities from an IRA.
For donors who are 70½ or older, they may already know about a popular gift option that allows them to make a gift directly from their IRA to a qualified charity without paying income taxes on the distribution. Historically, the amount donors could give was capped at $100,000 per year. This figure will now be adjusted annually for inflation beginning in 2024.

How does this affect donors?
This will allow donors to not only increase their giving but also ensure that their giving keeps pace with inflation. And they can make an impact—and see that impact—now rather than after their lifetime.
Allows for a distribution from an IRA to fund a life-income gift.
For donors who are 70½ or older, they can now make a one-time election for a qualified charitable distribution from their IRA of up to $50,000 (without paying income taxes on the distribution) to fund a life-income gift such as a charitable gift annuity, charitable remainder unitrust or charitable remainder annuity trust.

How does this affect donors?
These types of life-income gifts allow donors to make a gift to a qualified charitable organization and receive
lifetime payments to boost their retirement income or provide a lifetime payment to them and/or their spouse.

For more information about making a gift from your IRA to support California Hospital Medical Center, please contact Susan Shum, Chief Philanthropy Officer, at 213.742.5662 or susan.shum@commonspirit.org.

The gift planning information presented on this site is intended as general. It is not to be considered tax, legal or financial advice. Please consult your own personal advisors prior to any decision.

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