Inspiration to make a difference: How SECURE 2.0 is motivating your charitable clients

By now, you’ve no doubt read a few, if not several, news stories about the passage of legislation known as SECURE 2.0. Signed into law on December 29, 2022, by President Biden, SECURE 2.0 includes a range of provisions governing qualified retirement plans, including increasing the required minimum distribution (RMD) age from 72 to 73 starting this year, and further increasing it to 75 starting in 2033. Catch-up contributions limits are now higher, too, for people in their early 60s. 

Attorneys, accountants, and financial advisors who counsel philanthropic individuals are also zeroing in on the SECURE Act’s provisions that enhance a charitable planning vehicle known as the Qualified Charitable Distribution (QCD). Under the new laws, not only will the $100,000 annual QCD cap be indexed for inflation, but taxpayers also can take advantage of a one-time “Legacy IRA” version of the QCD up to a $50,000 maximum. 

At the Foundation, it’s been an inspiring couple of weeks since SECURE 2.0 went into effect. We’re glad to see that the passage of SECURE 2.0 has sparked so much conversation among charitably-minded individuals – no doubt including your clients. Clearly SECURE 2.0 in the news has increased overall interest in using retirement plans and QCDs to fund charitable giving goals. 

As you talk with your philanthropic clients this month, keep in mind that certain types of funds at the Foundation are ideal recipients of QCDs. Designated Funds and Field of Interest Funds in particular are extremely valuable tools in certain circumstances and it’s important to be aware of what the terms mean.

See our menu of charitable funds

A Field of Interest Fund at the Foundation is established by your client for a charitable purpose described by your client. For example, a Field of Interest Fund can be established to support research for rare diseases, to support organizations that assist homeless families in getting back on their feet, to enable art museums to acquire works that celebrate the region’s diversity, and so on. The knowledgeable team at the Foundation distributes grants from the Field of Interest Fund according to the spending policy set by your client to further the client’s wishes. Your client selects the name of the fund, whether they wish to use their own name (e.g., Samuels Family Fund or Samuels Family Fund for the Arts), maintain anonymity (e.g., Maryville Fund for the Arts), or something else altogether (e.g., Bettering Our World Fund).    

A Designated Fund at the Foundation is a good choice for a client who knows they want to support a particular nonprofit or multiple nonprofits for multiple years. This is useful so that the distributions can be spread out over time to help with the charity or charities’ cash flow planning, enable your client to benefit from a larger charitable tax deduction in the current year when the client’s tax rates are high rather than spreading it out over future years when tax rate projections are lower, or both. The client specifies the charities to receive distributions according to a spending policy they select, and the client can choose a name for the fund.

As always, please reach out to our team. We are here to help you serve your charitable clients as they strive to improve the quality of life in our region through their charitable gifts.

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