Uncertainty continues for SECURE 2.0’s proposed QCD enhancements, but the law “as is” is still great for clients 

If it feels as though your clients are asking more questions these days about retirement planning, you’re likely not imagining it. Heightened awareness of retirement planning rules and tools is no doubt in large part the result of a series of legislative initiatives that have been in the news concerning retirement plans originating more than two years ago with the passage of the SECURE Act in December 2019. 

SECURE 2.0 passed the House of Representatives in March 2022, and companion legislation is now under discussion in the Senate. With so many moving parts, it can be hard to keep track of where this stands. Our team found it helpful to review a brief section-by-section discussion draft released by the Senate on May 26, 2022, especially the introductory paragraphs, to see a snapshot of the legislation. 

Charitable planners, including the team at the Community Foundation, are watching this legislation with interest. Proposed provisions of SECURE 2.0 would enhance Qualified Charitable Distributions (“QCDs”) by indexing the $100,000 allowance for inflation and adding a provision for a one-time $50,000 distribution to a charitable remainder trust or another split-interest gift vehicle. 

The legislation is bipartisan with broad support but still likely will not be signed into law until later this year. That is because the House and Senate versions need to be reconciled and then the bill would need to be signed by President Biden.

Here’s what’s important, though: A QCD under the current law is still an excellent planning tool. As you meet with a client who is 70 ½ or older, take a careful look at the client’s retirement income situation. If the client does not need to rely on IRA income (which is subject to income tax), the client may benefit significantly from distributing up to $100,000 annually from that IRA (and thereby avoiding the income tax) directly to a “qualifying” charity, such as a scholarship fund or designated fund at the Community Foundation. Indeed, a designated fund gives your client the freedom to support one or more favorite charities according to the client’s timeline and goals. 

As always, the Community Foundation for Greater Atlanta is here to help you serve your clients by setting up a charitable fund, providing guidance regarding their charitable giving plan, discussing strategies to maximize their charitable impact, involving multiple generations in their philanthropy, and much more. For more information, please contact Alison O’Carroll, director and philanthropic counsel, at 404.333.0421 or aocarroll@cfgreateratlanta.org.