The House of Representatives recently approved HR 2954, the "Securing a Strong Retirement Act of 2022," which could make significant changes to a popular charitable giving vehicle, the Qualified Charitable Distribution (QCD).
A QCD is a direct transfer of funds from an Individual Retirement Account (IRA) that can be counted toward satisfying a donor’s required minimum distributions (RMD) for the year, as long as certain rules are met.
Significant changes include:
• Raising the minimum age at which a donor must begin taking the RMD from the current age of 72 to age 75 (phased in over time). Note that while the minimum age for the RMD would rise, the eligible age for a QCD would remain at 70 ½.
• Currently, an individual donor can contribute up to $100,000 per year in QCDs, as long as that individual is 70½ years old or older. For married couples, each spouse can make QCDs up to the $100,000 limit for a potential total of $200,000. In this legislation, this limit would be indexed for inflation and would increase each year.
• In an interesting twist, HR 2954 would allow a one-time QCD transfer of up to $50,000 to a charitable gift annuity or charitable remainder trust.
This last provision — the ability to fund an income-producing product using a QCD transfer — could be a very popular option for donors. It could mean — depending on how the rules are written — that a donor could take a tax-free distribution from an IRA and, in return, get guaranteed income for the rest of their life (some of which might even be tax-free). The community foundation field will want to keep a close eye on the progress of this provision.
Keep in mind that HR 2954 is a long way from passage … it will still need to be approved by the US Senate and then signed by the President.