Congress appears ready to approve legislation that would permit distributions from an IRA to fund a charitable life income gift. The Senate Finance Committee unanimously passed the Enhancing American Retirement Now (EARN) Act, which is being called “Secure 2.0,” a nod to the Secure Act of 2019.
Within the EARN Act is the Legacy IRA Act, a provision over two decades in the making that has been championed by many in the charitable giving community. The Legacy IRA Act encourages charitable giving by permitting IRA owners age 70½ or older to make a one-time qualified charitable distribution (QCD) to fund a life income gift, such as a charitable gift annuity, charitable remainder unitrust, or a charitable remainder annuity trust.
These types of life income gifts allow a donor to make a gift to a charitable organization, such as Washington University, and receive a lifetime payment, or provide a lifetime payment for a spouse, family member, or other beneficiary. When the income beneficiary dies, the remaining funds are distributed to the charity for the purpose designated by the donor.
The funding limit set forth in the Senate bill is $50,000—half that of the bill passed in the House. Minimum gift amounts for life income arrangements vary among charitable organizations—for example, at Washington University, the minimum amount to fund a charitable gift annuity is $25,000, while a charitable remainder unitrust requires an initial minimum gift of $50,000 to establish the trust (and the donor may add to the unitrust at any time).
In addition to the one-time $50,000 allowance of a QCD to a split-interest agreement, the provision also would index the annual IRA charitable distribution limit of $100,000 for inflation effective after 2023.
Should the finalized bill pass, which experts say is probable, there is a likelihood that IRA legacy giving could be expanded in the future. If you would like to discuss making a charitable gift from your IRA, or to receive a personalized illustration of how a life income gift could benefit you and Washington University, the Office of Planned Giving is happy to help. Please call 314-935-5373 or email plannedgiving@wustl.edu for more information.