NEW CHARITABLE GIVING LAWS: WHAT YOU NEED TO KNOW

The new year has brought more than just resolutions. It has brought new laws and other changes that may affect your charitable giving decisions. With any economic change, you may be looking at your finances and wondering how you will be impacted.

The new federal laws, which took effect January 1, 2023, include retirement changes, known collectively as “Secure 2.0,” that may affect your saving and your giving. It may even make it easier for you to make a difference at organizations you care about, like the FarmHouse Foundation. Some important things Secure 2.0 Act does that involve charitable giving:

1. Increases the required minimum distribution (RMD) age

Secure 2.0 increases the age retirees must begin taking taxable withdrawals to 73 years old in 2023 and 75 by 2033, up from the previous 72 years old. It does not, however, increase the age an IRA owner can make a qualified charitable distribution. That age remains 70 1/2 years old.

How does this affect me?

Simply put, the extension of the RMD age gives you more time to save. You will enjoy additional tax-free growth. It also can be significant if you do not want to begin withdrawing retirement funds during an unsettled economic climate, giving you more time for your stock portfolio to recover.

2. The $100,000 annual limit adjusts for inflation on direct gifts to qualified charities from your IRA

Are you 70 1/2 or older? If so, you may know about a popular gift option that allows you to make a gift directly from your IRA to a qualified charity without paying income taxes on the distribution. Historically, the amount you 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 me?

This allows you to not only increase your giving but also ensure your giving keeps pace with inflation. And you can make an impact—and see that impact—now rather than after your lifetime.

3. Allows for a distribution from your IRA to fund a life-income gift

If you are 70 1/2 or older, you can make a one-time election for a qualified charitable distribution of up to $50,000 (without being taxed) from your IRA to fund a life-income gift such as a charitable gift annuity, charitable remainder unitrust or charitable remainder annuity trust.

How does this affect me?

These types of life-income gifts allow you to make a gift to a qualified charitable organization and receive lifetime payments to boost your retirement income or provide a lifetime payment for you or your spouse.

Why Consider This Gift?

• Your gift will be put to use today, allowing you to see the difference your donation is making.

• Beginning in the year you turn 73, you can use your gift to satisfy all or part of your required minimum distribution (RMD).

• You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.

• Since the gift doesn’t count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.

For those 59 1/2 years old or older

If you are at least 59 1/2 years old, you can take a distribution and then make a gift from your IRA without penalty. If you itemize your deductions, you can take a charitable deduction for the amount of your gift.

At Any Age

No matter your age, you can designate the FarmHouse Foundation as the beneficiary of all or a percentage of your IRA and it will pass to us taxfree after your lifetime. Contact your IRA administrator for a change-ofbeneficiary form or download a form from your provider’s website.

Tip: It is critical to let us know of your gift because many popular retirement plan administrators assume no obligation to notify a charity of your designation. The administrator also will not monitor whether your gift designations are followed. We would love to talk to you about your gift intentions to ensure they are followed and thank you for your generosity.

Let’s Talk!

We can help answer any additional questions you might have about how the new retirement laws affect your charitable giving. Contact Allison Rickels, Foundation executive director & CEO, at (816) 891-9445 or allison@farmhouse.org to have a conversation about your legacy.