The “Setting Every Community Up for Retirement Enhancement” Act (“SECURE Act”) became effective on January 1, 2020 and includes changes to the rules governing retirement plans. One change, in particular, is that the age to begin taking required minimum distributions (RMDs) from your IRA is now 73. 

While the change to the age IRA distributions has caused confusion for some, it is important to know there have not been changes to the Qualified Charitable Distribution (QCD), sometimes also referred to as a “charitable IRA rollover.”  Those age 70 ½ and older can still make tax-advantaged QCD gifts to Bucknell directly from their IRA.

A QCD remains a tax-savvy way to make a gift to Bucknell University using your IRA.

How do I qualify?

• You must be 70½ years old or older at the time of the gift
• Gifts must come from an IRA account
• Gifts must go directly from your IRA to Bucknell University
• Gifts cannot exceed $100,000 per year to all charities per individual

What are the current benefits of making a QCD gift?

Under the SECURE Act, all of the great benefits of using a QCD to make a gift still exist:

• Gifts count toward your required minimum distribution (RMD) once mandatory
• Gifts are not included in, and therefore not taxed as, income for federal tax purposes
• Gifts can be directed to support the program or area of your choice
• Gifts make an immediate impact by advancing Bucknell’s mission

What are the benefits of making a QCD at age 70 ½ even though I won’t have a RMD until I’m age 73?

Although the SECURE Act increased the age at which you must start taking required minimum distributions (RMDs) from 70½ to 73, there are still many benefits that make QCDs an attractive choice beginning at age 70 ½:

• The QCD remains a tax-free gift. 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.   
• A QCD reduces the balance in your IRA. In certain circumstances, reducing your IRA balance may provide tax and charitable planning benefits. At age 73 or older, your RMD is based on an IRS formula that includes the annual value of your IRA balance. Reducing your balance may help avoid higher income in the future, which can increase Medicare premiums and cause other tax issues. Also, you may be in a position where you don’t want or need the income from your IRA.
• The SECURE Act also significantly limited the benefits of a previously popular planning technique referred to as the “stretch IRA”. Prior rules allowed those who inherited an IRA to “stretch” withdrawals from the account over their lifetime. Now, inherited IRA distributions for non-spousal beneficiaries must be received, and taxed, over a maximum of 10 years rather than “stretched” over their lifetime. For some, this change makes leaving IRA assets to heirs less attractive.

If you have questions about making a QCD gift, please explore additional resources or contact us: 

Melissa Diehl, Director, Estate, Trust and Gift Planning
570-577-3271
mmdiehl@bucknell.edu