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The Secure Act and the QCD

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The “Setting Every Community Up for Retirement Enhancement” Act, aka the SECURE Act, was among several bills attached recently to a “must-pass” appropriations bill that was signed into law on December 20, 2019. The SECURE Act includes changes to the rules governing retirement plans, including several provisions relevant to making gifts via a charitable IRA rollover (a Qualified Charitable Distribution or QCD.) The SECURE Act became effective on January 1, 2020.

The IRA charitable rollover or QCD is a terrific way to make a tax-free gift to St. Sebastian’s School using your traditional IRA.

How Do I Qualify?

  • You must be 70½ years old or older at the time of the gift
  • Gifts must go directly from your IRA to St. Sebastian
  • Gifts must come from a traditional IRA account
  • Gifts cannot exceed $100,000 per donor

Benefits of an IRA Charitable Rollover Gift
The SECURE Act increased the age at which you must start taking required minimum distributions (RMDs) from 70½ to 72. If you have not reached age 72 and aren’t required to take your RMD there are reasons to consider a QCD at 70½.  First, increases in the standard deduction mean far fewer taxpayers are able to itemize their income tax charitable deductions.  If you don’t itemize, a QCD offers all the benefits of an income tax charitable deduction.  You can’t claim a deduction for your QCD, but your QCD is not included in your income.  The QCD is a tax-free gift.  

Another reason to consider a QCD at 70½ is to reduce the balance in your IRA.  At age 72 or older your RMD is based on the balance in your IRA at the end of each year multiplied times a factor published by the IRS.  You may be in a position where you don’t want or need the income from your IRA.  Higher income can increase Medicare premiums and other tax issues.  Consider making QCDs at 70½ to reduce the balance in your IRA. 


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