Giving

Planned Giving

New Incentives for Charitable Giving

On December 29, 2022, the President signed the Fiscal Year 2022 Omnibus Appropriations Bill - ending decades of efforts to open up IRA assets to fund life income gifts! While there are limits on these gift opportunities, it is likely the start of something very big for planned giving programs.

Here are the basic facts:

  • A donor can make this once-in-a-lifetime gift election in only one tax year (hopefully with success and more lobbying, this may change).
  • The aggregate limit of IRA funded life income gifts in that year is $50,000 (meaning, you can only create up to $50,000 in these gifts, in one tax year only).
  • All life income payments to donor will be fully taxable as ordinary income (no capital gains or tax-free).
  • The annuitant(s) must be the donor and/or the donor's spouse.
  • Since these count as QCDs (Qualified Charitable Distributions), therefore it is presumed that up to $50,000 towards one of these IRA funded life income gifts will also count towards your donors' RMDs (Required Minimum Distributions), with the new age requirement now set to 73.
  • No charitable deduction. But like the QCD, think of it as “the tax-free” gift!
  • Both regular QCD gifts and QCD gifts for split interest gifts up to $50,000 will be adjusted for inflation each year (meaning the $100,000 direct QCD limit and the $50,000 life income limit will adjust upwards for inflation going forward).

Why is this so important?

Firstly, IRAs in particular are a huge financial asset class of the baby-boomers - in the $ Trillions - and already represent a phenomenal opportunity for legacy gifts.

Additionally, donors can now lock in guaranteed income for life at favorable rates while also making a significant legacy commitment.

As this law hopefully expands, life income gift programs in particular will become more and more important to our organization's future.