In This Issue—Fall 2023

• Year-End Giving Options That Benefit You and the Zoo
• 3 Strategies You Need to Know for 2023 Year-End Tax and Charitable Gift Planning
• Impact of Inflation on Tax Brackets and the Standard Deduction
• Qualified Charitable Distributions
• SECURE 2.0 and Its Impact on Your Year-End Planning
• Join the Laura Githens Smith Society

Sea lion. Photo Credit: Emily Wilson

SECURE 2.0 and Its Impact on Your Year-End Planning

At the end of 2022, the President signed into law the Consolidated Appropriations Act of 2023. This act included the SECURE 2.0 Act of 2022, which was designed to make it easier for employers to establish retirement plans for their employees, increase the amount that individuals save for their retirement, and extend the amount of time that retirement savings will last. A few of SECURE 2.0's provisions are of particular interest:  

• Larger qualified plan catch-up contributions for those over 50 and the inclusion of a new category of catch-up contributions for those between the ages of 60 and 63. This will allow retirement savers to increase the amount in their 401(k) or 403(b) plans.  
• IRA catch-up contributions are now indexed for inflation. Previously, IRA owners over the age of 50 could add an additional $1,000 over the standard contribution limit to their IRA. This $1,000 will now be indexed for inflation.  
• The age to begin withdrawing the annual required minimum distribution (RMD) from qualified retirement plans is increased from 72 to 73 for those who turn 73 between 2023 and 2030 and gradually increases to 75 by 2035. You can still begin taking distributions from your qualified retirement plan at the age of 59½. 

Charitable Gift Strategy: Use IRA Assets to Fund a Gift Annuity and Receive Income for Life

Under the new law, a qualified charitable distribution (QCD) from an IRA is now allowed to be transferred to a life-income gift instrument, such as a gift annuity. This provision can be exercised in only one tax year during a donor's lifetime. There are many details that must be followed to properly create a life-income gift from a QCD. 

Example: George, 76, who has $800,000 in his IRA, transfers $50,000 from the IRA for a gift annuity. Afterwards, he will have $750,000 in his IRA to earn income and be distributed, and he will receive $3,400 (6.8%) per year from the gift annuity. That is a higher percentage than he has been withdrawing, and it is guaranteed. Thus he is able to arrange a charitable gift while sustaining and possibly enhancing his retirement security.