The SECURE 2.0 Act includes changes that may affect how you can spend your retirement income and potentially save on your taxes. One of these changes relates to the use of Qualified Charitable Distributions (QCDs). In short, QCDs can be a crucial element as you plan for your retirement.

What’s a QCD?
A Qualified Charitable Distribution lets you use your distributions from your IRA accounts to contribute to charitable causes. It is important to note that a QCD is not taxed, and is not counted as part of your taxable income. So, if you are 70½ or older with a traditional IRA, you can use QCDs to donate to philanthropic causes — with tax advantages.
Here is some additional information you need to know about QCD changes related to SECURE 2.0 Act:
The Age For Required Minimum Distributions Has Increased
- One of the updates in the SECURE 2.0 Act is an increase in the age at which one must start taking required minimum distributions (RMDs).
- Previously, individuals with a taxable IRA were required to begin taking RMDs each year, starting at 72 years of age. But as of January 1, this year, the minimum age you must start withdrawals is raised to 73. This will change again in 2033, with an increase from 73 to 75.
- Taking your RMD can increase your taxable income, therefore in some cases you can move into a new income tax bracket. This is how a QCD can help.
The QCD Limit Has Been Indexed For Inflation
- The SECURE 2.0 Act increases the annual $100,000 limit for inflation starting in 2024, to account for the higher cost of living and preserve the value and tax benefits of QCDs — so you could potentially save more on your income taxes, while also giving larger gifts to your favorite charitable causes.
You Now Have More Options
- Previously, three planning arrangements via QCDs, Charitable Gift Annuities, Charitable Remainder Annuity Trusts and Charitable Remainder UniTrusts, were not allowed. But, it’s now possible to use QCDs to fund these charitable vehicles through a one-time transfer of up to $50,000, provided the trust is appropriately established. This is expected to remove the barrier to entry for many donors interested in QCDs.
These Options Explained
- Charitable Gift Annuity is an arrangement whereby assets are given to a charity in return for the charity’s promise to make lifetime payments of a fixed amount to a beneficiary, who is often the donor. The annuity may be “deferred” in that the beneficiary payments may begin at a future date.
- Charitable Remainder UniTrusts provides income to a named beneficiary during the donor’s life and then the remainder of the trust to a charitable cause. The donor is usually the initial beneficiary. The trust provides a fixed percentage of the fair market value of the assets in the trust to the beneficiary.
- Charitable Remainder Annuity Trusts are the result of a gift in which a donor contributes assets to an irrevocable trust that then donates to one or more charities while also paying a fixed income to one or more designated beneficiaries.
Since new QCD options are available, and the giving limit will be indexed for inflation, this could be a good time to see how they can be used for your tax-advantaged charitable giving.
If you want to learn more about how to take full advantage of the new provisions, please don’t hesitate to contact an Oppenheimer Financial Professional. They can help you navigate how to plan and invest for your future retirement.
DISCLOSURE
The information provided herein is general in nature for informational purposes only and does not represent legal or tax advice. Oppenheimer & Co. Inc. does not provide legal or tax advice. The material herein has been obtained from various sources believed to be reliable but does not purport to be a complete statement of all material facts relating to the strategy or investments types discussed. Contact your legal or tax advisor for specific advice regarding your circumstances.