SECURE Act Means Changes for the IRA Rollover

January 28, 2020

By Terry Gaumer, CAP®, Affiliate Director of Development

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was enacted January 1, 2020. With this legislation came questions from those who are planning for retirement or are retired. Some of the most critical changes were made to the IRA Charitable Rollover, also referred to as the Qualified Charitable Distribution (QCD). This is a quick and easy rundown of the changes. Even with the changes below, you can still use your IRA to make charitable gifts to the causes you love and receive tax benefits, including the Endow Iowa Tax Credit. 

1. The Required Minimum Distribution age changed from 70 ½ years to 72 years of age for those born July 1, 1949 or later. This change allows you additional time to grow the funds in your account. Those 70 ½ years of age may still utilize the Qualified Charitable Distribution. 
2. The maximum age for IRA contributions has been eliminated. Prior to the SECURE Act, you could only contribute to your traditional IRA until age 70 ½. The elimination of this age restriction allows more time for you to save if you are still working. This rule includes anti-abuse rules impacting those making contributions after age 70 ½ and utilizing the QCD. Any QCD will be reduced by the cumulative amount of total post 70 ½ IRA contributions that have not already been used to offset an earlier QCD.
3. IRA beneficiary rules have changed. Prior to the SECURE Act, beneficiaries could take lifetime distributions. This rule still applies to beneficiaries who are spouses, but non-spouse beneficiaries now have a 10-year distribution cap. This provision could result in an increased interest in naming charities rather than individuals as IRA beneficiaries. 

Using the Qualified Charitable Distribution (QCD) is still a great gift option for those 70 ½ and older. If you are 70 ½ or older, you may still transfer up to $100,000 per year to a qualified charitable organization, like the Community Foundation, without paying income tax on the distribution. Those age 72 and older may use their Required Minimum Distribution as a QCD. Click here to read more about the IRA Charitable Rollover.

CFNEIA development staff can help you better understand charitable opportunities available through your IRA. Contact us at 319-287-9106 or info@cfneia.org.

CFNEIA always recommends discussing your retirement planning and charitable giving plan with your attorney or financial advisor. We work with advisors across our 20-county region to help their clients meet their personal and charitable goals.